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Miguel Pérez
Sábado, 1 de febrero 2025, 15:30
President Trump's announcement to increase tariffs by 25% on Canada and Mexico, and 10% on Chinese products, appears to be just the beginning of new 'trade wars' similar to those during his first term. The Republican president confirmed that this increase will be followed by extraordinary levies on goods from the European Union and other sectoral taxes on pharmaceuticals, chips, steel, aluminum, or copper, among others.
"Tariffs will make us very rich and very strong," Trump declared, downplaying the costs of such protectionism on national employment, the economy, and trade within North America. "I think there might be some temporary, short-term disruption, and people will understand," he assured journalists during a press conference in the Oval Office on Friday night, on the eve of the new taxes' implementation.
Whether understood or not, the American public seems alert to the likely price increases in the markets. Trump hinted at his intentions in November, and December's consumption statistics reveal a substantial increase in purchases of computers, screens, or refrigerators, traditionally imported from Mexico. Companies have also stockpiled reserves while major national sectors, such as automotive and energy, have urged the government to establish partial exemptions due to fears of shortages or excessive price hikes.
For the industry in general, it's not just about potential import issues but also the reaction from Canada and Mexico, who plan to retaliate with new levies on American goods. Experts consider the start of a tit-for-tat game in a massive market encompassing the three countries—USA, Canada, and Mexico—risky, a market sustained for over thirty years through mutual agreements. This bloc's trade exchange exceeded $1.5 trillion in 2024.
The question remains when the war will begin. Both Trump and his press secretary, Karoline Leavitt, have confirmed that the new tariffs will be approved today, but have left it unclear whether they will be applied immediately or if the government will allow some leeway. Multilateral talks are still ongoing. One involves the U.S. administration with an official Canadian delegation. Another involves U.S. corporate executives seeking to pressure the government for exemptions in certain sectors. They all share a fear of inflation and a halt in economic growth.
The Republican president, however, has indicated his intention to impose levies on gas and oil starting February 18, albeit at reduced rates. The U.S. receives 4.6 million barrels of crude daily from Canada, and his aim is to apply a 10% levy compared to 25% on other imports.
Some media speculate this Saturday that Trump might prefer to wait and assess the effects of these initial levies before proceeding with the European Union, the United States' major trading partner, or sectoral taxes. The degree of risk the president assumes in forcing other nations to yield to his demands under the threat of economic maneuvering is very high.
'Los Angeles Times' is particularly graphic this Saturday. "It could raise the price of everything from gasoline and pickup trucks to avocados for Super Bowl guacamole dip," the newspaper notes in its report on the strategy of the man now being dubbed 'the tariff man'. A major automotive consultancy has warned that the industry faces a "shock" and predicts a "tariff winter" for the country. Ontario's governor, Doug Ford, has already announced he will order the removal of all American alcohol from stores in this Canadian province. After the European Union, Canada is the second-largest market for U.S.-made spirits. U.S. citizens may also find wine, beer, wood, or medicines significantly more expensive. Canada's Prime Minister, Justin Trudeau, has announced a "strong" response from a nation that holds the highest human development index in the world, is the eighth-largest economy, and plays a prominent role in the G7 and G8.
On both sides of the southern border, anxiety grows as the tariff decree approaches. Beyond illegal immigration or drug trafficking, many see Trump's intentions as an attempt to strengthen the national automotive and steel industries. Both sectors believe that massive imports from the Central American country are diminishing domestic production power, although some experts argue that improving their position through economic protectionism will harm a "symbiotic relationship" between the U.S. and Mexico that has lasted for a long time. Numerous factories began opening in the 1960s in Mexican territory due to the high costs of doing so in the United States. It was more economical to produce south of Texas and export to the U.S. Moreover, there is a strong cultural and familial bond between the two countries, which is much less present with the northern neighbor, Canada.
The new trade war is not surprising from a president like Trump, who in 2018 already promoted a significant increase in tariffs on China. He then justified his policy on the need to promote local industry, reduce the U.S. trade deficit, and protect against a hypothetical intellectual 'invasion' from Beijing. The Republican leader also used the argument that the U.S. had been "cheated" by its international partners during Democrat Barack Obama's administration. A phrase that strongly resembles "the EU has treated us terribly" which he now uses to warn of possible tariffs on the European Union. "They treat us very badly: they don't take our cars, they don't take our agricultural products; essentially, they take almost nothing. And we have a tremendous deficit with the European Union," he has reprimanded Brussels.
As the global economy looks to the White House this Saturday, awaiting the president's order to take effect, he reiterated last night his accusations against China, Canada, and Mexico as responsible for the fentanyl entering the United States and killing "hundreds of thousands" of citizens each year. That, and the demand for Canada and Mexico to stop immigration at their borders and accept the deportations of their nationals, form Trump's three justifications for his enthusiasm for tariff barriers. These arguments do not align with others explicitly stated by Trump himself, suggesting that all these measures should not be understood as negotiation tools. For him, the issue is simpler: "Tariffs do not cause inflation, but success."
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