A warning from the United States' main trading partners points to the consequences that the policy of increasing tariffs announced by President-elect Donald Trump against Mexico, Canada and China would have that could harm many.
Authorities in Mexico, Canada and China warned that Donald Trump's threat to impose high tariffs on products from the United States' three main trading partners would harm the economies of all involved, could worsen inflation and damage labor markets.
In the initial responses to the surprising Trump's Monday announcement to impose a 25% tariff on imports from Canada and Mexico and an additional 10% levy on Chinese goods until they clamp down on illicit drugs and migrants crossing the border, leaders and other top officials urged the dialogue and cooperation.
“To one tariff, another will come in response, and so on until we put common businesses at risk,” Mexican President Claudia Sheinbaum said at a daily press conference, in which she said she planned to send a letter to Trump and speak with him to discuss the topic.
A Bank of Canada official, for its part, said it was clear that any move by Trump to follow through on the threat would reverberate on both sides of the northern U.S. border.
“What happens in the United States has a huge impact on us, and something like this would clearly have an impact on both economies,” said Lieutenant Governor Rhys Mendes.
Earlier, a spokesman for China's embassy in Washington said: “No one will win a trade war or a tariff war.”
As of September, U.S. Commerce Department data showed the three countries had shipped more than $1 trillion worth of goods to the United States in the first nine months of the year, with Mexico in first place, followed by China and then Canada.
Attack fentanyl
Trump, who will take office on January 20, had announced throughout his campaign that he would impose tariffs on US trade partners.
Imposing tariffs on imports was one of the main political axes during his first four-year term and, as now, he had also threatened to do so for non-economic reasons. In 2019, he threatened 5% tariffs on Mexico to get its cooperation in tightening border controls.
In the current case, the flow of illicit drugs, especially fentanyl, to the United States added to the conflicts with the three countries. In fact, the number of deaths in the country from fentanyl overdoses decreased in 2023, according to the Centers for Disease Control and Prevention, although nearly 75,000 people continued to succumb to the powerful opioid.
Regarding China specifically, Trump said in a post on his social media: “Until they stop doing this, we will charge China an additional 10% tariff on top of any additional tariffs, on all of their many products arriving in the United States.” United States of America.”
It was not entirely clear what this would mean for China, as he had previously promised to end the Asian giant's most favored country status and apply tariffs on Chinese imports of more than 60%, much higher than those imposed during his first term. .
The new tariffs Trump threatens appear to violate the terms of the United States-Mexico-Canada Trade Agreement (USMCA). The Republican approved the treaty into law, which went into effect in 2020 and continued largely tariff-free trade between the three countries, but the deal expires in 2026.
Warren Murayama, former general counsel to the US Trade Representative under President George HW Bush, said Trump's threat could be carried out relatively easily by making a national emergency declaration, which would unlock the Emergency Economic Powers Act. International.
Trump's attack late on Monday sent the Mexican and Canadian currencies tumbling, although U.S. stock markets largely took the event in stride as many investors saw it as an opening for negotiation rather than a certainty. .
Shares of some companies considered especially vulnerable, such as automakers Ford and General Motors, fell sharply.
“Given that the publication makes explicit reference to the flow of people and drugs across the southern and northern borders, it suggests that this specific tariff threat is more of a negotiating tool than an attempt to raise revenues,” said Thomas Ryan, an economist for North America from Capital Economics.
“It leaves the door open for Canada and Mexico to come up with a credible plan in the next two months to try to avoid those tariffs.”