Donald Trump has imposed tariffs on imports from Canada, Mexico and China. They came into effect on March 4. The US President's decision threatens an economic recession in the country, the destruction of supply chains and could hit Trump's own support. The Economist, WSJ, Reuters, The Washington Post, Business Insider and Politico have analyzed the key consequences of the new US Administration's tariff policy
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A 25% tariff on imports from Canada and Mexico, as well as a doubling of tariffs on Chinese goods to 20% from 10%, took effect on March 4. The decision threatens to dismantle decades of North American economic integration and significantly complicate Washington's relations with Beijing, writes The Economist.
US President Donald Trump, who has long promoted the idea of protectionism, decided not to stop at warnings this time. In response, China announced an additional 10-15% tariff on American goods, including soybeans, pork and beef.
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In addition, Beijing imposed export restrictions on 25 American companies, 10 of which were punished for selling weapons to Taiwan, Reuters reported.
Canada and Mexico, which built their economies on free trade with the United States, were also not left out.
Canadian Prime Minister Justin Trudeau announced a mirror 25% tariff on US imports worth 30 billion Canadian dollars and the possibility of expanding countermeasures to 125 billion. “Americans will pay more for food, fuel and cars, and thousands of people could lose their jobs,” Trudeau said. He called Trump’s actions “unreasonable” and in violation of the USMCA agreement, which replaced NAFTA , writes Politico.
Ontario Premier Doug Ford went even further, threatening to cut off electricity to the US, as his province provides electricity to 1.5 million Americans. “If they want to destroy Ontario, I will do anything, including cutting off their power,” he was quoted as saying by the WSJ.
Mexico has so far refrained from making any tough statements, but President Claudia Sheinbaum has promised that the country is ready to respond accordingly, Reuters notes. Past trade disputes between the United States and Mexico have always ended with concessions from Washington. “Every time the United States imposed tariffs, Mexico responded, and eventually the Americans backed down,” says Luis de la Calle, a former NAFTA negotiator.
US President Donald Trump imposed a 25% tariff on imports from Canada and Mexico effective March 4. Photo: Getty Images
Implications for the US
American businesses are already feeling the effects. “Tariffs are a tax on Americans,” said Candace Laing, president of the Canadian Chamber of Commerce. The auto industry could be particularly hard hit by the new tariffs. Car prices in the US could rise by $2,500, and supply chains could be thrown into chaos, The Economist writes.
Stock markets reacted quickly to the tariff hikes. The S&P 500 index fell nearly 2%, its biggest one-day drop since the start of the year, according to The Economist. “Consumers fear a new round of inflation due to tariffs,” says Business Insider analyst Ziwai Zhang. Polls support this: According to a Washington Post-Ipsos poll, 69% of Americans believe the new tariffs will raise prices.
Trump's decision threatens not only individual sectors, but also the economic stability of the United States.
The Atlanta Federal Reserve Bank revised its first-quarter GDP forecast down from +2.3% to -2.8%. Economists warn that trade wars could lead to a recession, The Washington Post reports.
Canadian Prime Minister Justin Trudeau and US President Donald Trump Photo Getty Images
Political pressure on importers
Trump uses tariffs as a tool of political pressure. The White House demands that Canada and Mexico step up the fight against drug trafficking and illegal migration. “If you want to avoid tariffs, stop the flow of fentanyl and migrants,” Trump urges.
In response, Ottawa has already spent 1.3 billion Canadian dollars on border reinforcements, including the deployment of Black Hawk helicopters, but this has not changed Washington's position, Politico reports.
This is not the first time the US has incited trade conflicts. During his first term, Trump already imposed tariffs on Chinese products, but then the US economy was growing, and now the situation is much worse. The world is changing, and now Beijing is not as interested in concessions as before, Business Insider notes.
The question is whether this strategy will actually pay political dividends for Trump. Recent polls show that only 30% of Americans support the introduction of tariffs, while 68% believe that Trump pays more attention to them than to inflation or the economy in general, writes The Washington Post.
