Donald Trump is ready to impose the promised tariffs on Mexico and Canada! According to Bloomberg, the US President-elect has vowed to slap additional duties on goods from Canada and Mexico. On top of that, a trade war with China seems to be looming on the horizon.
The Republican victor of the presidential election announced on November 25 that he intended to impose extra tariffs on goods from China, Canada, and Mexico. He proposed a 10% tariff on Chinese products and a hefty 25% tariff on all goods from Mexico and Canada. Trump believes these measures will help tackle illegal immigration and drug trafficking across borders.
Trump's tariff threats have alarmed the international community. Many hoped for a reversal, especially after Scott Bessint was named the next US Treasury Secretary. Local business leaders consider this move a sign of a more balanced tariff policy. However, experts think Trump is unlikely to change his course.
Early forecasts suggest the new tariffs could range from 25% on car batteries to 100% on electric vehicles. Notably, the tariffs introduced during Trump's first term remain in place. Still, this does not faze the president-elect, who recently declared his intention to hike tariffs even higher, to 60% on Chinese goods and 20% on imports from other countries. Trump aims to boost federal revenue and relocate manufacturing back to the US.
Analysts surveyed by Bloomberg warn that raising tariffs on Mexican and Canadian imports could severely affect the auto industry and other sectors. The Mexican automotive sector, for instance, heavily reliant on US exports of electronics, plastics, and industrial goods, is expected to suffer. Flavio Volpe, president of the Canadian Automotive Parts Manufacturers' Association, said that the automotive industries in Canada and the US were so interconnected and operated with such low margins that a 25% tariff seemed unreasonable.
Higher tariffs are also expected to drive up energy prices, including oil and gas, which are Canada’s primary exports to the US. Wilbur Ross, Trump’s former Secretary of Commerce, previously warned that tariffs on Canadian energy exports would be pointless as they would increase costs without creating more US jobs.
The Institute of International Finance (IIF) shares a grim outlook. In its report, the organization argues that Trump’s tariff policies will cause significant disruptions in global supply chains. Analysts warn of a slowdown in global economic growth driven by the planned import tariffs, ranging from 10% to 20% on all goods entering the US.
