By Parker Soughers
Following the inauguration of President Donald Trump, many new initiatives were put into effect. One such initiative was fulfilling a campaign promise of imposing tariffs on the United States’ closest trading partners.
Tariffs are defined as taxes on imported goods from other countries. As a part of Trump’s tariff plan, he would charge 10% tariffs on all imported products from China, and 25% tariffs on all goods from Canada and Mexico. Together, these three countries made up 40% of the USA’s imports in the last year.
What are the reasons behind these sudden and expensive tariffs? Trump campaigned on a promise to introduce import duties to US trading partners. He argued that these tariffs would protect US jobs, raise tax revenue, boost manufacturing in the US, grow the economy, and even “combat the scourge of fentanyl.” The Trump administration blames and targets China, Mexico and even Canada to end the fentanyl epidemic.
Another reason for Trump’s trade plan is to apply political and economic pressure on trade partners. Trump has expressed interest in claiming Canada as a 51st state, implying that tariffs would no longer be applied. His motives for annexing Canada would be to eliminate trade barriers, create better energy production in North America, and streamline resource extraction from Canadian land. In a quote from the Oval Office, Trump stated, “Look, what I’d like to see —Canada become our 51st state.”
However, Trump’s actions have sparked a much larger issue: a looming global trade war. A global trade war would be devastating for America. With high tariffs applied to neighboring countries and long time trade partners, the American economy could be in trouble. Long time trade agreements could fail, sending the American economy into a downward spiral. Inflation rates could spike to as high as 4%, as stated by Capital Economics.
In retaliation to new imposed tariffs, China imposed its own tariffs. These 10% tariffs would impact American exported crude oil, agricultural machinery, and car engines. There would also be 15% tariffs on coal and liquefied natural gas. China’s response only furthered fears of a global trade war, with a spokesperson from the Chinese Embassy in Washington stating, “Tariffs and trade wars have no winners.”
Tariffs scheduled to go into effect for Mexico and Canada are now currently delayed for a 30 day period. Both Mexico and Canada agreed to initiatives to attack fentanyl smuggling and boost border enforcement resources. These agreements have brought North America from the cusp of an all out trade war. The threat is not over, however. Canada and Mexico have only bought time. These tariff plans still can go into effect should agreements not be reached between the Trump administration and its trade partners.
As the tariff negotiations between America’s neighbors continue over the next 30 days, and Chinese Tariffs go into effect, the Trump administration will be busy trying to end the threat of a trade war that they started.
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