In addition to increasing the 10% global duty on Chinese goods, President Donald Trump intends to impose duties on Canada and Mexico beginning Tuesday.
Trump said that illegal narcotics, including fentanyl, are being imported into the US at alarming amounts and that import fees will compel other nations to take action against the trafficking in a Truth Social post on Thursday.
The Republican president said, “We cannot allow this scourge to continue harming the USA, so until it stops or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will in fact go into effect, as scheduled.” On that date, China will also be subject to an additional 10% tariff.
The world economy has already been rocked by the potential of more tariffs, and consumers are worried that if Trump hikes import levies, inflation will accelerate and the auto industry and other American manufacturers will suffer. However, Trump has also occasionally acted aggressively only to provide last-minute reprieves. For example, he previously consented to a 30-day delay of the tariffs that were originally scheduled to begin in February on Canada and Mexico.
The S&P 500 index dropped 1.6% on Thursday as the stock market was alarmed by the prospect of tariffs. The S&P 500 has lost nearly all of the gains that the president originally pointed to as proof of an economic recovery, and is currently only 1.4% higher than it was following Trump’s election victory in November.
Trump dismissed any worries when asked Thursday about the reality that import businesses and consumers bear the majority of the cost of tariffs, stating that it is a lie. A higher US dollar might be able to partially offset the costs of tariffs, but considering the scope of Trump’s proposed taxes, his assertion defies most economic models.
Trump plans to impose a 10% levy on Canadian energy items including electricity and oil and 25% tariffs on imports from Canada and Mexico. Mexico and Canada responded to the move, which was supposedly about immigration and drug trafficking, by highlighting their current initiatives to address these problems. Mexico deployed 10,000 soldiers of its National Guard to its border with the United States, and Canada established a fentanyl czar.
On Thursday, Mexican President Claudia Sheinbaum expressed her desire to meet with Trump following this week’s Cabinet-level discussions in Washington. Secretary of State Marco Rubio was to meet with Mexico’s Foreign Affairs Secretary Juan Ramón de la Fuente Thursday afternoon.
As you are aware, Trump has a distinct communication style, Sheinbaum stated. However, she stated that her government will remain calm and hopeful that a deal would be reached to avert the tariffs.
“I’m hoping we can come to an agreement so we can make another announcement on March 4,” she said.
According to her, the security chiefs of Mexico and the United States were talking about exchanging intelligence that would enable significant arrests in the United States. Regarding the economy, she stated that Mexico’s objective is to preserve the free trade agreement between the United States and Mexico that was negotiated during the first Trump administration. The North American Free Trade Agreement from 1994 was updated in that 2020 agreement, which also included Canada.
In addition to stating that his government’s ministers and officials are in Washington this week, Canadian Prime Minister Justin Trudeau stated his nation has spent over $1 billion to strengthen border security.
Trudeau stated in Montreal that there is no fentanyl emergency for the United States at the Canadian border, and that is precisely what we are protesting right now. We have already discussed the specifics of our approach in case the United States decides to implement tariffs. We will be imposing tariffs on $30 billion worth of U.S. goods. Additionally, three weeks later, $125 billion in tariffs will be imposed. However, we do not wish to be in that situation.
According to his social media post, Trump did impose a 10% duty on China for its involvement in the production of chemicals used to create fentanyl, and that charge would now be quadrupled.
In a letter to Jamieson Greer, the recently appointed U.S. trade representative, China’s Commerce Minister Wang Wentao stated on Thursday that trade disputes should be settled by discussions and agreements.
Jacob Jensen, a trade policy expert at the center-right think tank American Action Forum, estimates that the 25% tariffs on Canada and Mexico would result in an annual tax hike for the American people of between $120 billion and $225 billion. Up to $25 billion may be lost by consumers as a result of the new China tariffs.
Trump, who assured supporters in the previous year’s presidential election that he could swiftly reduce the inflation rate, which skyrocketed during Democratic President Joe Biden’s tenure, may suffer political setbacks as a result of the possibility of higher prices and slower GDP. However, Trump ran on a platform of enacting sweeping tariffs, which he intends to do on April 2 by adjusting them to equal the taxes he believes other nations impose on American goods.
Trump stated in his latest social media post that the April 2 reciprocal tariff date will continue to be in full force and effect.
White House National Economic Council director Kevin Hassett told News Nation that Mexico and Canada’s fentanyl progress was not as remarkable as the president had hoped. Regarding the extent of drug smuggling, Canada and Mexico differ greatly. During the previous fiscal year, U.S. customs officers found 43 pounds (19.5 kilograms) of fentanyl at the Canadian border, while they found 21,100 pounds (9,570 kilograms) across the Mexican border.
The reciprocal duties would be in addition to the ones imposed on Canada and Mexico, Hassett emphasized.
Trump said on Wednesday that a 25% tariff would also be applied to European nations as part of his reciprocal tariffs. In addition to the reciprocal duties, he wants separate levies to be imposed on pharmaceuticals, computers, and automobiles.
In addition to planned levies on copper imports, the president has already said that he is eliminating the exemptions from his 2018 steel and aluminum tariffs.
U.S. consumers are already becoming alarmed by the possibility of a wider trade war if other countries implement their own retaliatory tariffs, which might jeopardize Trump’s pledge to spur faster economic development.
On Tuesday, the Conference Board said that its consumer confidence index had fallen 7 points to 98.3. Since August 2021, when inflationary pressures started to ripple across the United States as the economy recovered from the coronavirus outbreak, it was the biggest monthly fall. According to the Conference Board, average 12-month inflation estimates increased from 5.2% to 6% in February.
Stephanie Guichard, a senior economist at the Conference Board, stated that the number of references to trade and tariffs had increased significantly, returning to a level not seen before 2019. Notably, the majority of the answers focused on criticism of the current administration and its policies.
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This report was written by Rob Gillies and Didi Tang of the Associated Press. From Mexico City, Sanchez provided a report.
