In a sweeping move, U.S. President Donald Trump signed an executive order on Saturday, instituting a 25% additional tariff on imports from Canada and Mexico, alongside a 10% tariff increase on imports from China, effective February 4.
The decision has ignited immediate retaliation from affected nations. Canada declared a 25% levy on C$30 billion ($21 billion) of American goods starting Tuesday, with plans to extend this to C$125 billion worth of goods within 21 days. Mexican President Claudia Sheinbaum has pledged both tariff and non-tariff measures to safeguard Mexico's interests. Meanwhile, China's Ministry of Foreign Affairs, Ministry of Commerce, and Ministry of Public Security have vocally opposed the U.S. tariffs, citing fentanyl-related concerns. China plans to file a complaint with the WTO and implement countermeasures to protect its rights and interests.
The aggressive tariff strategy has drawn widespread criticism from analysts who warn of potential inflation spikes, increased consumer prices, job losses in the U.S., and disruptions to global economic stability.
GDP Cuts, Higher Prices and Job Losses in Numbers
A report from the Tax Foundation, a U.S. think tank, released on January 31, forecasts that Trump's tariffs could reduce U.S. GDP growth by 0.4% and increase taxes by $1.2 trillion between 2025 and 2034. This translates to an average tax hike of over $830 per U.S. household in 2025.
Greg Daco, Chief Economist at EY, predicts that the tariff plan could depress U.S. economic growth by 1.5 percentage points this year, potentially pushing Canada and Mexico into recession and triggering stagflation in the U.S., according to Reuters.
The Canadian Chamber of Commerce warns that a 25% tariff and full retaliation could lead to a 2.6% decline in Canada's real GDP, costing an average of C$1,900 per household annually. In the U.S., GDP might drop by 1.6%, costing an average of $1,300 per household.
Mexican President Claudia Sheinbaum has highlighted that Trump's tariffs could result in the loss of 400,000 U.S. jobs and drive up consumer prices.
The World Bank, in mid-January, cautioned that a broad 10% U.S. tariff hike could reduce the already modest global economic growth projection for 2025 from 2.7% to 2.4% if trading partners retaliate.
A January 2021 study by the U.S.-China Business Council indicated that trade policies during Trump's first term led to the loss of 245,000 American jobs.
'Dumbest Trade War in History'
The Wall Street Journal's editorial board labeled the Trump administration's tariffs on Canada, Mexico, and China as \"the dumbest trade war in history\" on January 31.
\"Mr. Trump sometimes sounds as if the U.S. shouldn't import anything at all, that America can be a perfectly closed economy making everything at home,\" the WSJ editorial stated.
The editorial further remarked, \"It reminds us of the old Bernard Lewis joke that it's risky to be America's enemy but it can be fatal to be its friend.\"
Friedrich Merz, chairman of the German Christian Democratic Union, commented, \"Tariffs have never been a good idea to resolve trade policy conflicts,\" warning that rising import costs would fuel inflation and adversely affect American consumers.
A spokesperson from China's Foreign Ministry emphasized on Sunday, \"There is no winner in trade and tariff wars,\" adding that the U.S.'s unilateral tariff hikes violate WTO rules and will not resolve its domestic economic issues or benefit either nation, let alone the global economy.
Reference(s):
cgtn.com
