Washington (AFP) – Time is running short for Canada, Mexico, and China to avert sweeping tariffs announced by US President Donald Trump, with the levies due to take effect past midnight over what he deems an “unacceptable” flow of drugs. Trump unveiled — then paused — blanket tariffs on imports from his country’s major trading partners Canada and Mexico in February, accusing them of failing to stop illegal immigration and drug trafficking. The halt is due to expire one minute after midnight Monday running into Tuesday.
But sweeping levies of up to 25 percent will likely snarl supply chains for key sectors like automobiles and construction materials, risking a hike in consumer prices. This could complicate Trump’s efforts to fulfill his campaign promises of lowering the cost of living for households. Trump has also threatened a further 10-percent tariff on Chinese goods from Tuesday, piling on an additional 10-percent rate that has already taken effect. Beyond this week’s looming deadline, Trump fired another salvo Monday with word that tariffs on agricultural imports would come on April 2. He did not provide details and it was not immediately clear how such levies would interact with his other plans.
“There’s no doubt that the administration is trying to solve the long-standing fentanyl and immigration challenges, and these tariffs have given the administration leverage as we’ve seen with the response so far by Canada and Mexico,” said Ryan Majerus, a former US trade official. Washington is also trying to rebalance trade ties, he told AFP. But using emergency economic powers to impose tariffs is novel, “and it remains to be seen how this will all play out in potential lawsuits,” warned Majerus, a partner at law firm King & Spalding.
Robert Dietz, chief economist at the National Association of Home Builders, told AFP that the group advised builders that “we could see a combined duty tariff rate of above 50 percent on Canadian lumber.” Trump’s tariffs on Canada are expected to pile on to other potential levies on lumber, he noted. “Softwood lumber futures prices have gone up eight percent in the last few weeks,” he added. While the United States also plans to expand forestry, Dietz said, prices are likely to rise in the short-run. Anecdotally, some builders expect they could face higher costs of $7,500 to $10,000 per newly-built single-family home, he said.
JPMorgan analysts warned Friday that Tuesday’s tariffs would “create a significant new headwind to economic activity” and boost consumer costs. They added that the planned levies on all three countries would lift the US effective tariff rate to nine percent — from 1.4 percent in 2017.
Mexico’s President Claudia Sheinbaum said Monday that her country has contingency plans ready, whatever decision Trump takes. “There is constant communication in different areas, both security and trade, and we will wait to see what happens,” Sheinbaum added. Over the weekend, US Commerce Secretary Howard Lutnick told Fox News’ “Sunday Morning Futures” that even as Mexico and Canada have reasonably addressed Washington’s border concerns, they would still face tariffs. He took aim at illicit fentanyl entering the United States, saying its ingredients came from China.
But Lutnick left the door open to potential changes in Trump’s tariff plans: “Exactly what they are, we’re going to leave that for the president and his team to negotiate.” Lutnick added that duties on China were likely set unless Beijing stopped making ingredients for fentanyl. While Washington has targeted China over chemicals for the drug, many of these components have legitimate medical uses too — making prosecution tricky.
Canadian Prime Minister Justin Trudeau has said that less than one percent of the fentanyl and undocumented migrants that enter the United States come through the Canadian border. He said on Sunday that Ottawa would keep working to ensure there are no fresh levies this week. But he added that Canada would “have a strong, unequivocal and proportional response” if levies took effect. Trudeau’s government has taken a series of steps to address Trump’s concerns, including a Can$1.3-billion ($901-million) plan to enhance border security. It has also named a fentanyl czar to coordinate efforts against the drug.
Meanwhile, Mexico last week extradited some of its most notorious imprisoned drug lords to the United States in a bid to avert the sweeping duties. They included a cartel kingpin wanted for decades over the murder of a US undercover agent.
© 2024 AFP
