In a bold move, Donald Trump, the president-elect of the United States, announced plans to impose a 25% tax on all products entering the U.S. from Canada and Mexico, coupled with an additional 10% tariff on goods from the Chinese mainland. This declaration has ignited widespread global apprehension regarding the potential repercussions and the growing trend of protectionism.
Canadian Prime Minister Justin Trudeau described his recent discussions with Trump as \"an excellent conversation,\" yet he refrained from offering substantial commentary on the proposed tariff measures.
Meanwhile, in Mexico, President Claudia Sheinbaum issued a stern warning about the economic fallout, highlighting risks of inflation and job losses in both nations. \"For every tariff, there will be a kind response until we put at risk our shared enterprises,\" Sheinbaum stated, emphasizing that such tariffs would endanger U.S. companies operating in Mexico, including giants like General Motors and Ford.
A report from S&P Global released on Friday underscored the potential damage, estimating that U.S. and European carmakers could lose up to 17% of their combined annual core profits in a worst-case scenario if steep tariffs are imposed on Europe and key allies like Mexico and Canada.
The impact of tariffs was notably felt during Trump's first term, particularly between 2018 and 2019, where similar policies disrupted the global trade system. The 2019 U.S. Federal Reserve Beige Book highlighted numerous challenges faced by American businesses, including supply chain disruptions, increased costs, and reduced profit margins.
Global manufacturing also saw a contraction in 2019, with the JPMorgan Global Manufacturing PMI remaining below the 50-mark threshold for five consecutive months, signaling declining output across most businesses.
The Tax Foundation reported that the Trump administration imposed nearly $80 billion in new taxes on Americans through tariffs on products valued at approximately $380 billion in 2018 and 2019. This marked one of the largest tax increases in decades, significantly impacting companies dealing with imported goods and multinational corporations.
President Joe Biden criticized the proposed tariff policies, labeling them \"counterproductive.\" He expressed hope that Trump would reconsider, suggesting that such measures could be detrimental to the economy.
In response to the looming tariffs, a group of Democrats introduced a bill citing the additional costs to American families. Representative Suzan DelBene, one of the bill's drafters, warned that sweeping tariffs on imported goods could raise consumer product prices by thousands of dollars annually, potentially driving the economy into a recession and damaging trade relationships with allies.
The Peterson Institute for International Economics echoed these concerns, estimating that Trump's larger tariff proposals could cost the average American household over $2,600 each year. A 2023 U.S. International Trade Commission report further illustrated the negative effects, noting significant declines in steel and aluminum imports and modest increases in domestic production, alongside severe impacts on downstream industries.
Trump's tariff policies have raised significant concerns about their potential to harm U.S. imports, disrupt the global supply chain, and jeopardize the economy. The risk of retaliation and escalating trade wars remains a key point of contention among global leaders.
Liu Pengyu, the spokesperson for the Chinese Embassy in Washington, emphasized that economic and trade cooperation between the Chinese mainland and the U.S. is mutually beneficial. \"No one will win a trade war or a tariff war,\" he stated.
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A lose-lose proposition: Trump's tariffs spark global backlash
cgtn.com
