US President Donald Trump has taken executive action to impose or threaten new tariffs on imports from Canada, Mexico and China. Here are the things to know about Trump’s actions, the counters from US trading partners and what it means for American consumers:
President Donald Trump declared an economic emergency in response to ongoing trade imbalances and concerns over US manufacturing, proposing tariffs that would substantially impact key US trading partners. This included a 10 per cent tariff on all imports from China and a 25 per cent tariff on imports from Canada and Mexico, both critical partners in the US economy. Additionally, energy products from Canada—such as oil, natural gas, and electricity—were slated for a 10 per cent tax.
These three countries—China, Canada, and Mexico—represent the largest trading relationships for the US, making the potential tariffs particularly impactful.
After negotiations with Mexico and Canada, Trump agreed to delay the tariffs for 30 days to avoid a trade war. This pause was contingent on both countries agreeing to specific measures, including enhanced border security and efforts to combat drug trafficking, such as Mexico’s commitment to deploy 10,000 national guard members to the US-Mexico border. This decision was a significant step back from the original tariff threat and helped ease immediate tensions.
The proposed tariffs would have wide-reaching effects across the US market, targeting various products. Canadian exports such as oil and lumber would face higher costs, while Chinese goods like plastics, textiles, and computer chips would become more expensive. For Mexico, the tariffs could increase prices on everyday items like produce, clothing, liquor, and auto parts, potentially leading to higher costs for US consumers. The lack of exceptions for US importers under Trump’s original order was a concern for businesses that rely on affordable goods from abroad.
Canada responded swiftly, with Prime Minister Justin Trudeau announcing retaliatory measures, including 25 per cent tariffs on up to $155 billion in US imports. Additionally, Canadian leaders encouraged consumers to buy Canadian-made products and, in some cases, provinces announced plans to remove US alcohol from government stores. This response showed Canada's willingness to stand firm in the face of US trade policies, potentially worsening the relationship between the two nations.
Not far behind, China also reacted to Trump’s tariff threats by imposing its own counter-tariffs on US exports. This included a 15 per cent tariff on coal and natural gas products, as well as a 10 per cent tariff on crude oil, agricultural machinery, and large-displacement cars. In addition to the tariff measures, China announced it would take the US to the World Trade Organization (WTO) over what it deemed “wrongful practices”. This escalation illustrated the growing global tensions resulting from Trump's aggressive trade policies.
Although the 30-day delay in tariff implementation provided temporary relief, it was unclear whether a long-term resolution would emerge. The uncertainty surrounding the trade situation and the potential for further tariffs caused volatility in global markets. Business leaders and investors were left facing the unpredictability of how long this pause would last and the long-term consequences of these trade actions for the international economy.
While tariffs typically affect companies directly, the cost is often passed on to consumers through higher prices. Economic analysts predicted the tariffs would increase inflation, adding an extra burden to US households. Studies suggested that the average American family could lose anywhere between $1,000 to $1,200 in purchasing power annually due to the tariffs. Additionally, energy prices—especially gasoline in the Midwest, where Canadian crude oil is refined—were expected to rise, further squeezing household budgets.
One of the main concerns of the business community was the uncertainty created by the threat of tariffs. While business leaders typically support lower taxes and reduced government regulation, their top priority is predictability. The looming threat of new tariffs and potential retaliation from trading partners disrupted supply chains and made planning more difficult for companies. The effects were felt on both sides of the US-Canada border, where businesses prepared for potential instability and higher costs.
During his presidential campaign, Trump promised sweeping economic changes, including lowering grocery prices and utility bills and tackling inflation. However, he backed off these earlier promises with the announcement of tariffs, acknowledging that there could be some pain for consumers. Despite this, he framed the tariffs as a necessary part of making America “great again”, with the understanding that any short-term discomfort would ultimately benefit the US economy in the long run.
-With inputs from AP
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