President -elect Donald Trump revealed this week his intention to impose a wide -ranging tariff on three commercial partners in the United States: China, Mexico and Canada.
This announcement comes almost two months before his opening speech, which is scheduled to happen on January 20, 2025. The plan can reconfigure the relationship with these three important commercial allies to the country and can be explained as a reference to what Trump’s position is when it comes to foreign policy.
The leader, who will be soon in the free world, was martyred about economic and national security concerns to justify these measures. It intends to take advantage of the massive demand for the United States on foreign commodities from these three countries to impose and gain important issues that affect America such as border security, drug trafficking, and unfair competition.
“Mexico and Canada have the absolute right and strength to solve this long problem easily,” Trump’s publication On the social media platform full of real right.
“We ask for this strength to use, and even this time they are doing, it’s time to pay a very big price!”
Mexico and Canada will face a 25 % tariff
Trump’s strategy will include a 25 % increase in all goods coming from Mexico and Canada, while Chinese goods can witness a 10 % increase in customs tax. These higher graphics will be in place to prove their commitment to resolving these issues.
Illegal immigration and drug trafficking are the most urgent issues that affect the relationship with Mexico and Canada, while spying issues of companies, fake tools, and supported imports have plagued the trade relations of the United States with China for decades.
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The size of these proposed definitions is unprecedented. During his previous administration, Trump implemented the customs tariff on about 380 billion dollars of goods. However, these new proposals will have a much greater impact on the economy of the four countries and may have the consequences of the huge macroeconomic economy on each of them.
High definitions in all areas can lead to an increase in the United States
Economists warn that increasing import costs for consumer economy, such as the United States, can be immediately transferred to consumers in the form of higher prices on daily goods.
This will include high prices on groceries, home necessities, school materials, spare parts, office supplies, and many other similar groups that will have an immediate impact on both personal and companies budgets.
Gary Ng, the Senior Economist in Asia and the Pacific in Natx, warns that these definitions may lead to high inflation in the United States and things may complicate for the Federal Reserve in terms of monetary policy decisions.
In this context, the strong dollar will exacerbate the issue because it may slow economic growth if these countries decide revenge by increasing the customs tariff for American goods as well.
Meanwhile, some sectors will face the most sharp consequences of this full increase.
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For Mexico, the auto industry can be the most exposed in cash because it relies heavily on exports to the United States. Trademarks such as Honda, Toyota and Nissan have manufacturing factories in the Central American country that produce thousands of vehicles that are marketed in the United States.
Meanwhile, the consumer electronics manufacturing sector in China will be significantly affected, as well as companies such as Foxconn, Lenovo and NVIDIA that have manufacturing facilities in the Asian country that exports major components and complete commodities to America.
“What the rest of the world should take from this is that Trump looks at relations on a bilateral perspective and Trump looks at relations based on whether the United States has a trade deficit or a trade surplus with a specific country,” said Steve Okon, head of the Consulting Consulting Company in Singapore.
He added: “Trump has made clear that Usmca is something that needs to be re -reunified and re -negotiate it when it becomes president.
China and Canada’s reaction was a moderate reaction … now
Canada and China dealt with reports in a moderate tone. In the case of Canada, they claim that they have a “mutual useful” relationship with the United States and confirmed that they were always completely committed to securing borders and cooperation in facilitating trade between the two countries.
“Of course, we will continue to discuss these issues with the incoming administration,” said Deputy Prime Minister Christia Freeland on these proposed measures.
Meanwhile, the Chinese embassy in Washington responded with a warning about the zero game, which stated that the “tariff war” is widely in practice. The government asserts that any accusations related to the government’s support for illegal exports of drugs similar to the fentanel to America are completely wrong.
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The embassy said in a statement to the British Broadcasting Authority: “The idea of China deliberately allows the Ventanil sects to flow to the United States completely contradicts the facts and reality.”
The markets have already started responding to the news. The Canadian dollar is advancing by 1 % against the US dollar, while the Mexican bizo has increased by 1.6 % because increasing customs tariffs will harm its economic growth badly.
Meanwhile, the Chinese Yuan barely moved despite Trump’s hot speech, perhaps because the proposed tariff was slightly lower for the Asian country.
A higher price for the Canadian dollar and Mexican pyseo reflects the increasing uncertainty in the market on how these two countries – who are highly dependent on American exports – reflect that Trump is going through his plans.
Trump’s approach challenges the current free trade framework, indicating a possible shift towards the relationship that benefits all parties. It seems that the elected president focuses on reducing the trade deficit and using the economic lever as a diplomatic tool.
The customs tariff is a significant departure from traditional trade diplomacy and can market the beginning of a new era of the most aggressive policies.
