With an emergency sanctions law to justify imposing tariffs on imported goods from Canada and Mexico and an additional duty on imported Chinese goods, US President Donald Trump has entered new trade-related territory.
Trump signed three separate executive orders on Saturday, imposing the tariffs, which have been globally criticised.
Here’s what you need to know about Trump’s tariffs and how the affected countries have retaliated.
What is Trump’s tariff plan?
It levies a 25% levy on goods from Mexico and Canada and imposes a 10% bill on all imports from China.
One exception to this is Canadian energy products, including oil, natural gas and electricity, which will be taxed at 10 percent.
According to White House officials, the tariffs are without any exceptions and even apply to Canadian imports that are currently duty-free.
Why is Trump imposing these tariffs?
Trump cited the IEEPA (International Emergency Economic Powers Act) as a mechanism for imposing the taxes, accusing the countries of not implementing adequate measures to stop illegal immigration and drug trafficking into the United States.
The White House stated in a statement that the goal is to hold them accountable for their commitments to halting illegal immigration and stopping the flow of poisonous fentanyl and other drugs into our country.
Trump has repeatedly threatened to impose widespread tariffs, a strategy he supports and believes helps generate revenue, protect American jobs, and create leverage.
The word “tariff”, Trump has often joked, “is the most beautiful word in the dictionary”.
Trump has repeatedly said he would like to see Canada become the “51st state”, and in January at the World Economic Forum in Davos, Switzerland, Trump called out his country’s northern neighbour.
“We have a tremendous deficit with Canada. We’re not going to have that any more. We can’t do it”, Trump said, teasing another way to avoid the tariffs.
“As you probably know, I say: ‘ You can always become a state. And then, if you are a state, we won’t have a deficit. We won’t have to tariff you, ‘” Trump said.
When do the tariffs start in effect?
Tariff collections are to begin at 12: 01am EST (05: 01 GMT) on Tuesday, according to Trump’s executive , orders. However, imports that were loaded onto a ship or onto their final mode of transportation before entering the US on or before Saturday at 12:01 am would not be subject to duties.
The White House stated that there are no prerequisites for the removal of the taxes, but that they will remain “until the crisis is over.”
How has Canada reacted to Trump’s tariffs?
Justin Trudeau, the prime minister of Canada, rebuffed his announcement that Ottawa would impose tariffs on up to $155 billion worth of US imports.
Those , tariffs would include American beer, wine and bourbon, as well as fruits and fruit juices, including orange juice from Trump’s home state of Florida, said Trudeau. Canada would also target goods including clothing, sports equipment and household appliances.
Trudeau questioned Trump’s threat to the country’s historic US-Canada partnership, which he claimed was the strongest “the world has ever seen”.
According to the US government, Canada was the largest buyer of the country’s goods in 2022, accounting for $356.5bn in purchases. An estimated , $2.7bn , worth of goods and services crossed the US-Canada border each day in 2023.
Trudeau remarked, “The White House’s actions today have broken us apart rather than bringing us together.” “We didn’t ask for this, but we will not back down”.
Mark Carney, a frontrunner to replace Trudeau as Canada’s next premier, also slammed the Trump tariffs and said Canada would be “united” and “stand up to a bully”.
President Trump thinks we’re pushovers. He doesn’t know Canadians.
We will stand up for our country. We will stand united. We will get stronger. Together. pic. twitter.com/XyPItjuWkP
How has Mexico reacted to Trump’s tariffs?
Retaliatory tariffs were imposed on all products imported from Mexico on Saturday, according to Mexican President Claudia Sheinbaum.
Sheinbaum claimed in a protracted post on X that her government had been forced to engage in kind dialogue with its top trading partner in the north rather than face-to-face confrontation.
“I’ve instructed my economy minister to implement the plan B we’ve been working on, which includes tariff and non-tariff measures in defence of Mexico’s interests”, Sheinbaum posted, without specifying what US goods her government will target.
The US is by far Mexico’s most important foreign market, and Mexico in 2023 overtook China as the top destination for US exports.
Mexico has been preparing possible retaliatory tariffs on imports from the US, ranging from five percent to 20 percent, on pork, cheese, fresh produce, manufactured steel and aluminium, according to sources familiar with the matter. The auto industry would initially be exempt, they said.
Economy Minister Marcelo Ebrard said on X that Trump’s tariffs were a “flagrant violation” of the US-Mexico-Canada Agreement.
“Plan B is under way”, Ebrard said. “We will win”!
US exports to Mexico accounted for more than $322bn in 2023, Census Bureau data showed, while the US imported more than $475bn worth of Mexican products.
In her post, Sheinbaum also rejected as “slander” the White House’s allegation that drug cartels have an alliance with the Mexican government, a point Trump’s administration used to justify the tariffs.
What was China’s response to the tariffs?
China’s government has criticized the tariffs and Trump’s demand, while opening the door to discussions with the US to stop the deadly opioid from entering the US.
Beijing will challenge Trump’s tariff at the World Trade Organization (WTO) – a symbolic gesture – and take unspecified “countermeasures” in response to the levy, which takes effect on Tuesday, China’s Finance and Commerce Ministries said.
In contrast to the escalation that had marked China’s trade showdown with Trump during his first term in office, that response was less oblique and used more measured language.
China’s toned-down response contrasted with Canada’s and Mexico’s heated language and direct retaliation.
China’s Commerce Ministry said in a statement that Trump’s move “seriously violates” international trade rules, urging the US to “engage in frank dialogue and strengthen cooperation”.
By defending the rules-based trading system that US administrations of both parties have long advocated, filing a lawsuit with the WTO could help Beijing win in messaging. The European Union has a similar step by China in challenging tariffs of up to 45% on Chinese-made electric vehicles.
At the same time, a WTO appeal poses no immediate cost or threat to Washington.
China’s most severe reaction was to fentanyl, a subject in which former US president Joe Biden’s administration had also urged Beijing to halt shipments of the precursor chemicals needed to manufacture the drug.
“Fentanyl is America’s problem”, China’s Foreign Ministry said. “The Chinese side has worked closely with the United States to fight drug trafficking and achieve remarkable things.”
Has the US previously used tariffs that were comparable?
The closest parallel to Trump’s action was the late President Richard Nixon’s use of IEEPA’s predecessor law, the 1917 Trading With the Enemy Act, to impose a 10 percent across-the-board US tariff in 1971 to stem rising imports amid a balance-of-payments crisis after pulling the dollar off the gold standard.
Courts upheld Nixon’s action, but Jennifer Hillman, a trade law professor at Georgetown University and former World Trade Organization appellate judge, said Trump’s action may not fit the emergency.
The Nixon ruling and reporting requirement language in the IEEPA statute suggest that there needs to be a causal connection between the emergency – fentanyl and migrants – and the remedy: universal , tariffs , on Canada, Mexico and China.
“At least for me, I don’t think there is such a connection in this case”, Hillman said. “The , tariffs , would not be applied only to fentanyl, so there is not a clear reason why , tariffs , on all goods are ‘ necessary ‘ to deal with a problem of fentanyl or migrants”.
According to Nixon, the relationship between the importation rate and the dollar’s value was much more obvious.
What are experts saying?
According to economists, the tariffs are likely to stifle both the parties’ economic growth and the country’s inflation.
The market has historically been on Trump’s side, but this situation could change and give him a chance to challenge him, according to Mark Malek, chief investment officer of Siebert Financial in the US.
The US economy could suffer, according to a new analysis from the Budget Lab at Yale, which found that the average household would lose the equivalent of $1, 170 in income from taxes.
Lawrence Summers, an economist and former US Treasury Secretary, claimed that jobs in the “industrial heartland will be lost because American producers can’t compete due to higher input costs.”
He claimed on X that China will no longer trust Canada and Mexico and that the supply chain will suffer as a result.
Source: Aljazeera
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