Donald Trump’s tariff threats, which have been months in the making, have turned into a reality with the US President issuing executive orders under a rarely used International Emergency Economic Powers Act that all goods from Canada and Mexico will be subject to a 25 percent tariff, except Canadian energy products, which will face a 10 percent tariff.
All Chinese goods will also face a 10 percent tariff. His move, taken to urge Canada and Mexico to reduce illegal immigration to the US and to press the three nations to do more to curb the illegal smuggling of fentanyl and other opioid substances, threatens to upend the world economy and upset the global trading system.
Canada and Mexico were quick to retaliate with Canadian Prime Minister Justin Trudeau announcing that his country would impose a matching 25 percent tariff on all goods imported from the US, including alcohol and fruit. Mexican President Claudia Sheinbaum wrote on social media that she would ask her economic secretary to suitably retaliate.
China was more cautious and said it would file a case against the US in the WTO. The retaliatory tariffs will cause inflation to intensify, putting a spoke in Trump’s pre-poll promise of bringing down prices of gasoline, groceries, autos and other goods.
Trump admitted that there could be some negative consequences of his tariff move. ‘Will there be some pain? Yes, maybe (maybe not),’ he wrote on social media in capital letters. Experts and analysts have warned that Trump’s move could trigger an all-out trade war. With the US President also threatening tariffs on the European Union, more and more countries may turn to China, making it a global trading hub.
Democrats in the US have opposed Trump’s move, but they are in a minority in the House. Most Republicans have fallen in line, barring one or two dissenters. Major industry groups and lobbying groups, however, pushed back and warned that the tariffs would only harm American businesses and workers.
In his first term as president, Trump wanted to rework the North America Free Trade Agreement, calling it the ‘worst’ trade deal ever. Agriculturists were badly hit by the trade wars then, and they fear more of the same now. According to experts, US manufacturers will be the worst hit by Trump’s move, as they will not be able to sell their products at a competitive price, and Americans’ jobs will be at risk.
India, too, is bracing for a tariff blow from Trump. In the recent Union budget, customs duty on bikes was reduced to 40 percent, but that may not be enough for the US President, who has in the past also accused India of imposing steep tariffs.
In his previous term, when India reduced customs duty on bikes, including Harleys, he was not impressed. The world now awaits Donald Trump’s executive orders with dread. The fear of an all-out global trade war is very real. His moves will certainly not Make America Great Again.
