Washington (AFP) – President Donald Trump will implement tariffs Saturday on the three largest US trading partners — Canada, Mexico, and China — saying there was nothing they could do to forestall him while vowing further levies on various industries. Trump has reiterated his plans for 25 percent tariffs on imports from neighboring Canada and Mexico, saying they have failed to crack down on illegal migrants crossing the US border and on the flow of fentanyl. He also threatened a 10 percent duty for Chinese goods on the same day, similarly over the drug.
White House spokeswoman Karoline Leavitt affirmed Friday the February 1 imposition of these tariffs. “Both Canada and Mexico have allowed an unprecedented invasion of illegal fentanyl that is killing American citizens, and also immigrants into our country,” she told reporters. She did not commit to exemptions on sectors and rejected warnings that this would spark a trade war.
Beyond the three countries, Trump told reporters in the Oval Office Friday that tariffs on oil and gas could arrive around February 18. “Eventually we’re going to put tariffs on chips, we’re going to put tariffs on oil and gas,” he said, without specifying which countries he would target. He also vowed to impose higher duties on steel and aluminum, and eventually copper imports. Washington was “absolutely” going to impose tariffs on the European Union in the future as well, Trump said, adding that the bloc “has treated us so terribly.”
Canadian Prime Minister Justin Trudeau vowed Friday an “immediate response” if Trump acted, while Mexican President Claudia Sheinbaum said her government was in close contact with Trump’s administration. Trump has not specified tools he would use, though analysts suggest he could tap emergency economic powers, which allow the president to regulate imports during a national emergency. Beijing has rebuffed claims of its complicity in the deadly fentanyl trade. Close US ally Canada has countered that below one percent of undocumented migrants and fentanyl entering the United States comes through its northern border.
Some analysts believe tariff threats are a bargaining chip to accelerate the renegotiation of the existing trade deal, known as USMCA, between the United States, Mexico, and Canada. But tariff hikes on the trading partners would likely prove a major shock, shaking up supply chains.
– Oil in focus –
Asked if Saturday’s tariffs would include Canadian crude oil, Trump told reporters: “I’m probably going to reduce the tariff a little bit on that.” “We think we’re going to bring it down to 10 percent,” he added, noting that upcoming tariffs would come on top of existing rates. Nearly 60 percent of US crude oil imports are from Canada, noted the Congressional Research Service. Canadian heavy oil is refined in the United States and regions dependent on it may lack a ready substitute. Canadian producers would bear the brunt of tariffs, but US refiners would also be hit with higher costs, said Tom Kloza of the Oil Price Information Service. This could bring gasoline price increases.
– Recession risks –
Erica York of the Tax Foundation said the Canada, Mexico, and China tariffs would shrink economic output by 0.4 percent and amount to “an average tax increase of more than $830 per US household in 2025.” Oxford Economics analysts warned that blanket tariffs and pushback could tip Canada and Mexico into recessions, adding that the United States also risks a shallow downturn. US merchandise imports from both countries largely enter duty-free or with very low rates on average, said the Peterson Institute for International Economics. A tariff hike would likely shock industrial buyers and consumers.
Trump is also mulling more tariffs on Chinese goods. Beijing has vowed to defend its “national interests,” and a foreign ministry spokeswoman previously warned that “there are no winners in a trade war.” During election campaigning, Trump raised the idea of levies of 60 percent or higher on Chinese imports. Isaac Boltansky of financial services firm BTIG expects “incremental tariff increases” on Chinese goods. “Our sense is that Trump will vacillate between carrots and sticks with China, with the ultimate goal being some sort of grand bargain before the end of his term,” he said in a note.
© 2024 AFP
