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Americans may see a sharp increase in the cost of everything from cars to clothing to oil as a result of President-elect Donald Trump’s pledge to put tariffs on Canada, China, and Mexico on the first day of his administration.
Additionally, it has the potential to derail the United States, Canada, and Mexico trade agreement (USMCA), which was negotiated by Trump’s own administration and went into effect in 2020.
Late on Monday, Trump announced that he will impose a 25% tariff on all goods entering the US from Canada and Mexico until those nations take steps to stop illegal immigration and the overflow of drugs across the border.
Trump stated he will put a 10% tariff to goods coming into the United States from China.
Since the United States’ top three trading partners are China, Canada, and Mexico, Trump’s tariff plan would affect almost every facet of the American economy.
Experts think it won’t work as effectively this time around because nations are aware of what’s coming, even though it might very well be a bargaining strategy, much as Trump’s threat of tariffs during his first presidency.
According to Raymond Robertson, a professor of trade, economics, and public policy at Texas A&M University, “this is more likely a play designed to put pressure on our closest trading partners.” However, this is essentially the same strategy used twice. If you call the same play twice while playing football, it won’t be as effective the second time.
Countries are aware that this would be “disruptive” and a “disaster,” but they have “seen how this game works,” Robertson continued.
Instead of depending as much on the United States, trading partners might want to forge deeper links with Europe and other nations, “which means higher prices for us,” Robertson said. Additionally, he said, the initiative would probably strengthen ties between China and Mexico.
“Trump ran on this whole campaign that inflation is too high, but now he’s going to put a tax on everything you buy,” Robertson stated.
The majority of economists concur that tariffs cause inflation by raising input costs and passing them on to consumers. According to the Peterson Institute for International Economics, Trump’s campaign-trail tariffs would cost American households almost $2,600 annually.
Which trade deal does the United States, Canada, and Mexico currently have?
Trump updated the North American Free Trade Agreement, or NAFTA, by signing the USMCA.
Trade between the three nations was mostly duty-free thanks to it. The terms would appear to be broken by Trump’s tariff threat.
Trump stated during this year’s campaign that he planned to use a window that permits a review six years after signing to renegotiate the USMCA. However, that chance to renegotiate would not present itself until 2026.
Experts think it won’t work as effectively this time around because nations are aware of what’s coming, even though it might very well be a bargaining strategy, much as Trump’s threat of tariffs during his first presidency.
According to Raymond Robertson, a professor of trade, economics, and public policy at Texas A&M University, “this is more likely a play designed to put pressure on our closest trading partners.” However, this is essentially the same strategy used twice. If you call the same play twice while playing football, it won’t be as effective the second time.
Countries are aware that this would be “disruptive” and a “disaster,” but they have “seen how this game works,” Robertson continued.
Instead of depending as much on the United States, trading partners might want to forge deeper links with Europe and other nations, “which means higher prices for us,” Robertson said. Additionally, he said, the initiative would probably strengthen ties between China and Mexico.
“Trump ran on this whole campaign that inflation is too high, but now he’s going to put a tax on everything you buy,” Robertson stated.
The majority of economists concur that tariffs cause inflation by raising input costs and passing them on to consumers. According to the Peterson Institute for International Economics, Trump’s campaign-trail tariffs would cost American households almost $2,600 annually.
Which trade deal does the United States, Canada, and Mexico currently have?
Trump updated the North American Free Trade Agreement, or NAFTA, by signing the USMCA.
Trade between the three nations was mostly duty-free thanks to it. The terms would appear to be broken by Trump’s tariff threat.
Trump stated during this year’s campaign that he planned to use a window that permits a review six years after signing to renegotiate the USMCA. However, that chance to renegotiate would not present itself until 2026.
