Synopsis
As the U.S. gears up for tariff hikes, Canada, Mexico, and China prepare for the economic repercussions. President Trump's proposed increases aim to tackle illegal migration and drug importation, with both immediate and long-term impacts anticipated.Key Takeaways
- Tariffs on Canada and Mexico may rise by 25%
- China could face a 10% tariff increase
- Potential short-term disruptions in trade
- Canada’s Prime Minister warns of prepared responses
- Impact on consumer goods and agriculture
New York, Feb 1 (NationPress) China, Canada, and Mexico, the three largest trading partners of the U.S., are preparing for potential tariff increases threatened by President Donald Trump, who has also cautioned of "short-term disruption".
Trump has announced plans to elevate tariffs on imports from Canada and Mexico by 25 per cent to compel them to curb illegal migration and the flow of drugs into the U.S., while imposing a 10 per cent tariff on China to tackle the export of the hazardous Fentanyl drug and its precursors reaching the U.S.
While Trump insists that the additional costs will be borne by exporters, he acknowledged on Friday, “There could be some temporary, short-term disruption, and people will understand that.”
“But the tariffs are going to make us very rich and very strong – and we’re going to treat other countries very fairly,” he elaborated.
The effects of the increased tariffs will not be instantly apparent and will require time to filter into retail markets.
The US Trade Representative notes that China is the top exporter to the U.S., supplying goods valued at $536.3 billion, followed by Mexico at $454.8 billion, and Canada at $436.6 billion.
Trump's threat of heightened tariffs recently pressured Colombia into compliance, prompting it to agree to accept back illegal migrants sent from the U.S., demonstrating his determination to use tariffs as leverage.
The U.S. collaborates with its neighbors under the US-Mexico-Canada Agreement regarding trade, which replaced the previous North American Free Trade Agreement that Trump opposed.
Canadian officials held discussions with U.S. Border Czar Tom Homan on Friday in an effort to prevent the tariff increases.
Justin Trudeau, Canada's Prime Minister, who is facing unpopularity domestically, warned, "We're ready with a response -- a purposeful, forceful but reasonable, immediate response. It's not what we want, but if he moves forward, we will also act.”
“I won't sugarcoat it -- our nation could be facing difficult times in the coming days and weeks,” he added.
The U.S. accounts for 75 per cent of Canadian exports.
While specific retaliatory measures from Canada have yet to be detailed, Ontario’s Premier Doug Ford has indicated a ban on the sale of American alcohol in his province.
Petroleum and its derivatives represent the largest Canadian exports to the U.S., totaling $132 billion, and any increase in their retail prices will impact consumers at the pump, despite Trump's promise to control inflation.
Late Friday, the price of Brent crude futures for April rose by 0.7 per cent or 54 cents per barrel.
For Mexico, consumers may experience increased costs for vegetables and other agricultural products if tariffs are passed along.
Mexico’s President Claudia Sheinbaum stated on Thursday, “We will always defend respect for our sovereignty and a dialogue as equals but without subordination.”
China’s embassy in Washington adopted a restrained stance, asserting, “There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world.”
Tariffs imposed on China would impact a broad range of consumer goods, in addition to high-tech products.
