Washington (AFP) – The US commerce secretary on Tuesday said President Donald Trump could dial down huge tariffs on Canada and Mexico this week while maintaining pressure on China, hours after Canada’s premier attacked the United States’ “dumb” trade war. “I think he’s going to work something out with them,” Howard Lutnick told Fox Business, adding the announcement would probably come on Wednesday. “Somewhere in the middle will likely be the outcome, the president moving with the Canadians and Mexicans, but not all the way.”
Earlier Tuesday, a furious Trudeau accused Trump of trying to cause the collapse of Canada’s economy to make it easier for the United States to annex his country, and blasted Washington for targeting a close ally while “appeasing” Russia over Ukraine. Trump had announced — and then paused — blanket 25 percent tariffs on imports from major trading partners Canada and Mexico in February, accusing them of failing to stop illegal immigration and drug trafficking. But he pushed ahead with them Tuesday, citing a lack of progress on both fronts.
After Canada retaliated, Trump quickly threatened to escalate tariffs further, while mocking Trudeau’s position as the country’s prime minister. Fears that the tariff spat is rapidly devolving into the most brutal trade war of modern times sent global markets lower, with major Wall Street indexes tumbling for a second straight day. The sweeping duties will hit US imports from both North American neighbors, affecting everything from avocados to the lumber crucial for building US homes, and hampering supply chains for key sectors like automobiles. Multiple Canadian provinces also banned the sale of US alcohol products Tuesday, as part of a broad national retaliation against Trump’s latest tariffs.
Trump also inked an order Monday to increase a previously imposed 10 percent tariff on China to 20 percent — piling atop existing levies on various Chinese goods. Beijing condemned Washington’s “unilateral imposition of tariffs,” filing a complaint with the World Trade Organization and threatening to impose 10-15 percent levies on a range of agricultural imports from the United States.
Analysts and businesses have warned that the higher import costs could increase prices for consumers, which may complicate efforts to bring down inflation, one of the issues that got Trump elected. That includes at grocery stores — Mexico supplied 63 percent of US vegetable imports and nearly half of fruit and nut imports in 2023, according to the US Department of Agriculture. Brian Cornell, chief executive of US retail giant Target, said Tuesday the company could be forced to raise the cost of some fruits and vegetables over the coming days. “If there’s a 25 percent tariff, those prices will go up,” he told CNBC. “The short-term effect of any tariff clearly is inflation,” Charles van der Steene, the North America president for shipping giant Maersk, told CNBC. “It’s inflationary in its essence.”
Housing costs could also be hit. More than 70 percent of imports of two key building materials — softwood lumber and gypsum — come from Canada and Mexico, according to the National Association of Home Builders. Truck drivers at the Otay Mesa border crossing in Mexico told AFP they were already feeling the impact as they waited to cross into the United States.
Ottawa’s retaliatory 25 percent tariffs on $30 billion of goods took effect early Tuesday, and Trudeau said they would expand to “the remaining $125 billion of American products in 21 days time.” “Canadians are reasonable. We are polite,” he said. “We will not back down from a fight.” Addressing the US president directly, Trudeau said that while he thinks Trump is a “smart guy,” the tariffs are a “very dumb thing to do.” China said its tariffs against the United States will come into effect next week and will impact tens of billions of dollars in imports, from soybeans to chicken. Beijing also announced that imports of US lumber have been suspended, and that soybean shipments from three American exporters have been halted, as China’s foreign ministry vowed to fight the US trade war to the “bitter end.”
© 2024 AFP
