TRADE WARS

Submitted by ub on

Trump declares war on US trade partners including neighbors Canada and Mexico, the same nations he previously signed treaties with.

He imposed 25 percent tariffs on goods entering from Mexico and Canada, beginning at midnight, potentially leading to price hikes on a range of imported goods, from food and alcohol to automobiles.

highlights the escalating trade tensions between the U.S. and its North American neighbors, Canada and Mexico, under President Trump’s administration. Trump's decision to impose tariffs on Canadian and Mexican imports is a significant economic move with widespread consequences.

Here’s why it matters:

Tariff Implementation: Starting at midnight, tariffs of 25% were placed on imports from Canada and Mexico, with Canadian energy products facing a 10% duty. This action is likely to disrupt trade relationships and affect industries reliant on cross-border trade, especially in sectors like energy and agriculture.

Retaliation from Allies: Both Canada and Mexico have indicated they will retaliate. Canadian Prime Minister Justin Trudeau announced tariffs on over $100 billion worth of U.S. goods. While Mexico didn’t provide specifics, such retaliatory actions could lead to an escalating trade war, with damaging effects on industries in both countries.

Broader Global Impact: The tariffs are part of a wider strategy that also saw the U.S. increasing tariffs on China. This move added to global market uncertainty, as countries fear higher inflation and trade disruptions. For example, China retaliated with tariffs on U.S. farm exports, which could hit American farmers hard, especially in agriculture-dependent regions.

Root Causes: Trump's stated goals for these tariffs include addressing illegal immigration and drug trafficking from Mexico and Canada, though both countries have made progress on these issues. The tariffs are also tied to broader concerns about the U.S. trade imbalance, a goal that Trump has linked to a reduction in tariffs. However, the timeline for resolving such an imbalance seems uncertain, making a quick resolution to the trade tensions unlikely.

Market Uncertainty: As global markets react to these developments, the fear of a full-scale trade war looms large. This could drive inflation, disrupt supply chains, and affect the cost of goods for both consumers and businesses.

Overall, the situation raises important questions about the effectiveness of tariffs as a tool for addressing trade imbalances and domestic issues like immigration and drug trafficking. It also underlines the complexities of international trade relationships and the risk of unintended economic consequences when countries take aggressive tariff actions.

According to published reports, Groceries: A significant portion of food products, from meat and grains to fresh vegetables, are imported from Canada and Mexico—Canada is the largest exporter of meat to the U.S., while 77% of fresh vegetables were imported from Mexico and 11% were imported from Canada in 2020, according to the USDA.

Alcohol: The U.S. imported about $26 billion in alcohol from Mexico in 2022, while 18% of beer consumed from the U.S. stems from Mexico, say officials at the USDA.

Gas prices: Canada is the source of about 20% of oil used by Americans, while Canada and Mexico together account for 70% of U.S. crude imports—a 25% tariff could hike gas prices by 30 to 40 cents per gallon.

Lumber: Canada is the largest supplier of lumber to the U.S., and the tariffs could lead the price per thousand board feet to jump to $600, up from just under $590. Trump also ordered the Commerce Department to investigate whether lumber imports threaten national security as White House officials argue the U.S. should be self-sufficient in the lumber industry and that existing policies have driven up construction and housing costs.

Autos: The average price of a new car would increase by an estimated $3,000, as 22 percent of all vehicles sold in the U.S. are imported from Mexico and Canada, while a study cited by multiple outlets estimates a $9,000 price increase for a large SUV with a significant number of parts produced in Mexico and $8,000 for a pickup truck... etc.

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