admin
Americans may see a sharp increase in the cost of everything from automobiles to clothing to gasoline as a result of President-elect Donald Trump’s pledge to put tariffs on Canada, China, and Mexico on the first day of his administration.
Additionally, it has the potential to derail the United States, Canada, and Mexico trade agreement (USMCA), which was negotiated by Trump’s own administration and entered into force in 2020.
Late on Monday, Trump said that he will impose a 25% tax on all goods entering the US from Canada and Mexico unless those nations take steps to stop illegal immigration and the overflow of narcotics over the border.
Trump stated he will put a 10% tax on goods coming into the United States from China. Since the United States’ top three trade partners are China, Canada, and Mexico, Trump’s tariff proposal would affect almost every facet of the American economy.
Experts think it won’t work as effectively this time around since nations are aware of what’s coming, even if it may very well be a bargaining strategy, much as Trump’s threat of tariffs during his first presidency.
According to Raymond Robertson, a professor of trade, economics, and public policy at Texas A&M University, “this is more likely a play designed to put pressure on our closest trading partners.”
However, this is essentially the same strategy used twice. If you call the same play twice while playing football, it won’t be as effective the second time.
Countries are aware that this would be “disruptive” and a “disaster,” but they have “seen how this game works,” Robertson said.
Instead of depending as much on the United States, trading partners could want to forge deeper links with Europe and other nations, “which means higher prices for us,” Robertson said.
Additionally, he said, the initiative will probably strengthen ties between China and Mexico. “Trump ran on this whole campaign that inflation is too high, but now he’s going to put a tax on everything you buy,” Robertson said.
The majority of economists agree that tariffs cause inflation by raising input costs and passing them on to consumers.
According to the Peterson Institute for International Economics, Trump’s campaign-trail tariffs would cost American families almost $2,600 annually.
Which trade deal does the United States, Canada, and Mexico currently have?
Trump updated the North American Free Trade Agreement, or NAFTA, by signing the USMCA.
Trade between the three nations was mostly duty-free thanks to it. The terms would seem to be broken by Trump’s tariff threat.
Trump said during this year’s campaign that he planned to use a window that permits a review six years after signing to renegotiate the USMCA.
However, that chance to renegotiate would not present itself until 2026. Speaking with Trump on Monday night, Canadian Prime Minister Justin Trudeau stated “it was a good call.”
“We obviously talked about laying out the facts, talking about how the intense and effective connections between our two countries flow back and forth,” added Trudeau.
“We talked about some of the challenges that we can work on together.” Trump was retaliated against by the president of Mexico, who cautioned him against initiating a trade war.
“President Trump, we will not address immigration and drug use in the United States with tariffs or threats.
At her daily news conference, President Claudia Sheinbaum read aloud a letter her office is sending to Trump later Tuesday, saying, “These enormous challenges require cooperation and mutual understanding.”
The USMCA was a significant bipartisan accomplishment for Trump’s administration and a campaign pledge he fulfilled in 2016.
He called NAFTA one of the worst trade agreements ever negotiated and promised to negotiate a better one during his first presidential campaign.
He struck an agreement with the northern and southern neighbors of the United States, although it took the most of his time.
And on January 29, 2020, in front of Americans wearing uniforms, cowboy hats, and hard hats, he signed it with much pomp at the White House.
“Everyone said that this transaction was impossible to complete because it was too large, too intricate, or both. That day, Trump said, “We got it done.”