We have more details from Trump regarding tariffs. Let’s discuss what we know and don’t.
Trade War Details Emerge
The Wall Street Journal reports U.S. Tells Canada of New Tariffs as Trump’s Threatened Trade War Escalates
The U.S. notified Canada that it will be imposing a 25% tariff on all imports starting Tuesday, and a lower 10% tariff on Canadian oil and gas, Canadian officials said, as Mexico also braced Saturday for punitive duties from President Trump.
Canadian Prime Minister Justin Trudeau was made aware Saturday that the Trump administration was moving ahead with the tariffs, said Ontario Premier Doug Ford. U.S. Commerce secretary nominee Howard Lutnick made the call to the Canadian government, Ford said, citing Trump’s concerns with fentanyl coming across the border.
All eyes were on the White House on Saturday to announce the tariffs after Trump made clear Friday he intended to follow through with them. Speaking in the Oval Office on Friday, the president suggested the Mexico-Canada-China tariffs would just be the beginning, pledging that the U.S. would impose tariffs on computer chips, pharmaceuticals, steel, aluminum, copper, oil and gas imports as soon as mid-February.
The announcement for those sector-based and EU tariffs appeared separate from the duties on Mexico, Canada and China that he said would be announced Saturday.
In the short-term, leaders in Mexico, Canada and China—and CEOs of American companies—were hyperfocused on whether the president will include carve-outs for major industries that have lobbied him hard in recent days. His team has been in negotiations over how to potentially dial back tariffs on those countries from the across-the-board version the president has pledged, but officials have warned that Trump may still decide to go through with a full-throated approach.
Canada and Mexico combined supplied about 28% of U.S. imports in the first 11 months of 2024, according to Census Bureau data. China accounted for an additional 13.5%.
On Friday, Trudeau reiterated that Canada would have a “forceful but reasonable” response to U.S. tariffs. He warned that the Canadian economy could suffer. “I won’t sugarcoat it,” he said.
Mexican President Claudia Sheinbaum, meanwhile, said her government is ready for Trump’s tariffs and would respond in kind.
What’s Clear and What’s Not?
Many tariff details are still are unclear. I suspect on purpose.
But one thing is clear: No nation can count on Trump to honor treaties or any commitments he makes.
Trump just trashed the USMCA treaty that he hailed as the “best trade deal in history.“
Welcome to the Dumbest Trade War in US History, What’s Next?
This morning, I commented Welcome to the Dumbest Trade War in US History, What’s Next?
In response, a reader friend commented “Trade war? This is not about trade. Listen to Kudlow.“
I replied: “It does not matter what anyone thinks this is really about. What matters is Trump broke his own deal and cannot be trusted in any deal he makes. I fail to understand (other than TDS Type II), how anyone can defend this.“
A second friend accurately commented …
“Trump is making no pretense at all of following the law. He’s flinging tariffs for reasons unrelated to trade which violates the treaties. What he’s really doing is trying to dynamite the world trade system which runs based on legal treaties. It’s crazy.”
People can cheer these tariffs or not. But I would not cheer this even if I agreed in principle.
The US Senate ratified USMCA by an 89-10 margin. Scrapping the deal was not legally Trump’s decision to make no matter what pathetic excuses he makes.
Something is lost when the entire world understands that Trump may not honor any deal he makes, even ones he personally negotiates.
It’s pointless to sign a deal with Trump. There will be long-term ramifications of this reality, and they will not be any good.
Related Posts
Yesterday, I noted Seven Charts Show Tariffs Would Harm the US Auto Industry
The CATO institute does a great job explaining why tariffs on Canada and Mexico would be a very bad idea.
New Tariffs on Computer Chips and Semiconductors
Also note Trump Announces New Tariffs on Computer Chips and Semiconductors
It’s not like we can get advanced chips anywhere else. Thus, US customers will pay more than anyone else in the world for chips, and computers too.
How exactly is that supposed to help the US?