Donald Trump's imposition of tariffs on Canada and Mexico sets the stage for a potential trade war. Trump's actions, justified by claims of illegal immigration and fentanyl imports, have been met with retaliatory tariffs from both countries. This escalating conflict threatens to disrupt trade and cause economic harm to all involved, particularly the US auto, agricultural, and oil refining industries.
Donald Trump has spent the first two weeks of his second term as president sewing chaos and fear with the US and its domestic agencies. Now he’s about to start doing the same outside the US.that kick in on Tuesday in the US are a foretaste of what is to come; the first shots in what could become a devastating trade war between the US and the rest of the world.
Canada has already said it will impose 25 per cent tariffs on more than $US105 billion of US goods, while Mexico has said it will respond and is reported to be considering a particularly nasty strategy under which it would rotate the goods subject to its tariffs, generating uncertainty and broadening and deepening their impact.
Tariffs are a tax on consumers. Trump’s tariffs are a tax on US consumers – the duties are paid by the importer and the border not, as Trump in his wilful ignorance continues to assert, by the exporter.Trump wants the trillions of dollars of tariff revenues his advisers claim his tariffs will raise – his Treasury Secretary, Scott Bessent, has claimed than will raise between $US2.5 trillion and $US3 trillion over a decade – to pay for the extension and expansion, at a cost of about $US4.
Mexico accounts for about 42 per cent of all auto parts shipped into the US and Canada at least 13 per cent, with some parts criss-crossing the orders half a dozen times, or more. The effective rate on those components would be multiples of 25 per cent. Similarly, even though Trump has imposed “only” a 10 per cent tariff rate on oil imports from Canada, US refiners will be hit. Almost all Canada’s oil exports are to the US which, despite being a net exporter of oil, imports heavier crude grades from Canada that its domestic industry can’t supply.
TRUMP TARIFFS TRADE WAR CANADA MEXICO US ECONOMY
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