Mexico, Canada, and China will Face Tariffs on Day one According to Trump
Trump says he’ll impose new tariffs on China, Mexico, and Canada on day one of his presidency. This is to crack down on illegal immigration and drug smuggling.
In the years following his election, the US president-elect announced he would impose a 25% tariff on goods coming from Mexico and Canada.
Furthermore, he said “We will charge China a 10% tariff over any additional tariff” until fentanyl smuggling is stopped.
Threatening the three US trading partners could cause tensions to rise. Because tariffs are taxes on imports, they could raise prices for Americans as well.
US imports dominate the world. It imports $3.2tn (£2.6tn) of goods from China, Mexico, and Canada each year. A trade war between China and the United States cannot benefit either country.
In response to Trump’s tariff threat, Justin Trudeau spoke with the American leader for about 10 minutes, an official told the BBC. Their conversation was “good”.
Trudeau noted that Canadian border migrants cross more frequently than those from Mexico, the official said.
Mexico is the United States’ top trade partner, and the USMCA provides national and international investors with certainty.
There is a potential for disruption to the global supply chain and a great deal of damage to the three countries targeted.
Mexico and Canada will remain subject to tariffs until they clamp down on illegal migrants and drugs, particularly fentanyl, Trump said on Truth Social.
Mexico and Canada must ignore this simmering issue. Their time has come!” Trump says Chinese officials failed to fulfill their promises to execute the death penalty for fentanyl dealers.
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China knowingly allowing precursors of fentanyl to flow into the United States is contradicted by facts and reality, a spokesperson said.
No one will win from a trade war or tariff war between China and the US, he said.
Biden administration has been pushing Beijing to stop producing ingredients used in fentanyl, an opioid that killed almost 75,000 Americans in 2012.
During his campaign, Trump threatened Mexico and China with tariffs of up to 100%, far higher than those he instituted during his first term in office.
Additionally, Trump has said he will end China’s most-favored-nation trading status with the US, which offers high tariffs and other benefits.
Mexican exports went to the US last year, while Canadian exports went to the US around 75%. China’s exports to the US amount to roughly 15%, despite years of bitter trade disputes.
What is the Process of Tariffs?
Tariffs are domestic taxes imposed on imported goods proportionally to their value. In this case, a $50,000 imported car subject to a 25% tariff would be charged $12,500.
The Trump administration views tariffs as a way to grow the US economy, protect jobs, and raise taxes.
His previous claim was that these taxes would not cost you, but rather another country”. Economists tend to view this as misleading almost universally.
Domestic companies pay the charge, not foreign companies that export goods. Hence, it is essentially a tax paid to the government by domestic US firms.
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President Joe Biden, who succeeded Trump, has maintained many of Trump’s tariffs. US consumers bear most of the economic burden.
The “additional 10% tariff over any additional tariffs” Trump plans to impose on China were not immediately clear, such as those he was planning for Canada and Mexico.
How does Trump plan to achieve his goals?
Roach, who works at Yale Law School’s Paul Tsai China Center, told the BBC’s Business Today program that Trump is “clearly in keeping with his campaign promise to use tariffs as a tool.”
In the past, Trump’s pick for Treasury Secretary, Scott Bessent, suggested the president-elect uses tariff threats as a negotiation tactic.
Trump, Bessent told the Financial Times before he was nominated, is a free trader by nature. De-escalate by escalating.”
China’s economy is much more vulnerable than it was during Trump’s presidency.
The property market crisis, weak domestic demand, and growing local government debt have all caused difficulties for the country. There appears to be a violation of the USMCA on trade with new tariffs.
2020 is the implementation date of Trump’s law. Trade between the three neighboring countries remained duty-free. In addition to official reactions, there has been a critical response.
Premier Ford of Ontario calls Trump’s tariff a “devastating attack on Canadians and US workers”.
Senator Gerardo Fernández of Mexico asked: “What tariffs should be imposed on our [American] goods until they stop consuming drugs?”
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