Trump tariffs transform into bigger threats for Mexico, Canada than China
- Reference: 1732663690
- News link: https://www.theregister.co.uk/2024/11/26/trump_tariffs_mexico_canada/
- Source link:
In a pair of statements yesterday on his Truth Social site, Trump [1]announced plans to impose 25 percent tariffs on all goods coming from Canada and Mexico, and an [2]additional 10 percent tariff on all Chinese goods entering the States "above any additional tariffs" [3]already in [4]place on Chinese-manufactured goods.
When he was just candidate Trump prior to the November 5 election, the President-elect [5]promised across-the-board tariffs of 10 to 20 percent on all imports, with a 60 percent tariff on all Chinese-made goods. Much of the [6]argument for such aggressive tariffs would be to return manufacturing to the United States – particularly high-tech manufacturing of things like smartphones, computers, and other electronics, much of which is manufactured in China.
[7]
Those justifications were absent from Trump's social media posts, with the incoming President instead explaining that he was imposing the tariffs on Canada and Mexico because "thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before."
[8]
[9]
"This Tariff [on Mexico and Canada] will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country," Trump continued. "Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!"
Trump justified his 10 percent tariff increase on Chinese goods on similar grounds, expressing dissatisfaction that the Chinese government hadn't killed enough drug dealers caught manufacturing fentanyl for import to the US.
[10]
As The Register and many other publications have pointed out, tariffs don't penalize the country doing the exporting. It's importing companies that pay the tariffs, and importing companies that pass the costs along to consumers – in this case [11]Americans .
Targeting the US's three largest trade partners a bold strategy
[12]China , [13]Canada , and [14]Mexico are the US's three largest trade partners.
Most imports coming into the US from China involve electronic equipment. Mexico primarily exports vehicles and electronics, while Canada is the US's largest supplier of crude oil and petroleum fuel products.
In short, expect electronics, cars, and gas prices to spike if Trump follows through with these tariffs, and it [15]appears he has the legal authority to do so.
Whether or not such tariffs would work out for Trump remains unclear, according to William Reinsch, senior advisor on the economics program and Scholl chair in international business at the Center for Strategic and International Studies in Washington, D.C.
[16]US tariffs on Chinese EVs may grow from around 25% to 100%
[17]China miffed over electric vehicle tariff tiff with EU
[18]Elon Musk says he doesn't want 100% tariff on China-made electric vehicles
[19]GPUs dodge price hike as US extends China tariff deadline beyond 2022
"No one was expecting [the tariffs proposed yesterday], which is precisely why [Trump] did it," Reinsch told The Register . "As a result, everyone is forced, again, into reacting to whatever he has said. It's a leverage move, and we have to see how the other countries respond."
If Trump enacts his proposed tariffs, Reinsch said it would "blow up" the US-Mexico-Canada Agreement that, while due for review in 2026, could prompt retaliation from Canada and Mexico if Trump acted in a way that ignored the current terms of the agreement before the scheduled review.
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As for IT products coming in from China and elsewhere, Reinsch noted that both the US and China are party to the World Trade Organization's [21]Information Technology Agreement that sought to eliminate import and export duties on six categories of IT equipment: computers, telecommunications equipment, semiconductor manufacturing equipment, semiconductors themselves, software, and scientific equipment – not that the agreement has stopped the US from imposing tariffs on Chinese tech goods [22]before .
"If [Trump] intends to cover those items with new tariffs, he is violating that agreement as well, and it will have an impact on high-tech companies all over the world," Reinsch told us.
It's likely the entire thing is another set of empty threats. Even if the President-elect doesn't understand how tariffs work, people in his orbit probably do, and they'd know the effects on the American economy.
"This is classic Trump strategy – capture the daily media conversation with an unexpected and unconventional announcement based on the principle of retaliate first; negotiate later," Reinsch said. "It's most likely they're a threat intended to produce a negotiation and will probably not be implemented." ®
Get our [23]Tech Resources
[1] https://truthsocial.com/@realDonaldTrump/posts/113546215051155542
[2] https://truthsocial.com/@realDonaldTrump/posts/113546215408213585
[3] https://www.theregister.com/2024/05/15/us_china_tariff_hikes/
[4] https://www.theregister.com/2024/05/13/chinese_ev_tariffs/
[5] https://www.theregister.com/2024/11/01/us_trump_tariff/
[6] https://www.csis.org/analysis/great-expectations
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z0andkx1tDYrMVKhYc5CWgAAAQU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z0andkx1tDYrMVKhYc5CWgAAAQU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z0andkx1tDYrMVKhYc5CWgAAAQU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z0andkx1tDYrMVKhYc5CWgAAAQU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.cnn.com/2024/11/04/business/tariffs-donald-trump-prices/index.html
[12] https://tradingeconomics.com/united-states/imports/china
[13] https://tradingeconomics.com/united-states/imports/canada
[14] https://tradingeconomics.com/united-states/imports/mexico
[15] https://www.csis.org/analysis/making-tariffs-great-again-does-president-trump-have-legal-authority-implement-new-tariffs
[16] https://www.theregister.com/2024/05/13/chinese_ev_tariffs/
[17] https://www.theregister.com/2024/06/13/china_eu_ev_tariffs/
[18] https://www.theregister.com/2024/05/24/elon_musk_china_tariffs/
[19] https://www.theregister.com/2022/12/19/gpus_us_tariff_china/
[20] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z0andkx1tDYrMVKhYc5CWgAAAQU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[21] https://www.trade.gov/trade-guide-wto-it-agreement
[22] https://www.theregister.com/2024/05/15/us_china_tariff_hikes/
[23] https://whitepapers.theregister.com/
It could be greatly entertaining indeed if some serious US tabloid would set up a Trump Policy Lettuce livestream, possibly with some Texan H.E. Butt lettuce (formerly C.C. Butt, owned by the [1]Butt family since 1905), perfect for tossed salads!
The buttload of retaliate-first Trump tariffs, justified by hordes of pet cat-and-dog eating Haitian zombie criminalists ceaselessly crossing the border from Canada, Mexico, and China, via underground tunnels, deserves nothing less than a shrine of this totally sane sort IMHO!
[1] https://en.wikipedia.org/wiki/H-E-B
"As The Register and many other publications have pointed out, tariffs don't penalize the country doing the exporting."
They do when Americans stop buying their products cos they can't afford them.
What's the US-made alternative to an iPad?
US-made? None. However, Vietnam would love to have more manufacturing.
Pen and paper (except the paper may have been made in Canada and the pen in China).
>They do when Americans stop buying their products cos they can't afford them.
The unsaid bid is that with the exception of things like Baidu the Chinese don't sell directly to US consumers. They sell to US businesses who either repackage the product for retail sale or make products from those imports. Individual consumers will be inconvenienced, that's true, but a lot of US business will be unable to function profitably until alternative sources can be found -- if they can be found, that is.
One thing that's worth bearing in mind is that although the US export market is large its not so big that China can't exist without it, its actually a relatively small part of Chinese sales.
Wow, have you shopped online recently?
"with the exception of things like Baidu the Chinese don't sell directly to US consumers"
There are lots of websites that are just marketplaces giving buyers access to sellers. You know the big names. One of them has big, dark blue trucks that drive around my neighborhood every day. I buy merchandise that ships directly to me from Chinese companies often, and have done so for years. I would rather purchase from a seller with a shipping point inside the US, but I don't always get that option for specific items I want to buy.
Look around a bit, then come back and tell me that Baidu is the only one.
Re: Wow, have you shopped online recently?
Isn't Baidu a search engine?
AliExpress, otoh, presents Chinese-made and Chinese-shipped items at a price point remarkably below either eBay, Walmart marketplace, or the clear-cut former-forest company's marketplace. It's really nifty -- check out aliexpress sometime. (I guess shoppee? Tenmu? never tried those, though.)
You keep using that word...
"strategy" -- I don't think the president-to-be has any concept of the actual effects of the things that he says.
I'm sure he's flattered that you're attributing such grand analyses to him, however.
Another case of, "Why, If _I_ were president, why I'd .... and ... and ....."
Re: You keep using that word...
I think he has the concept of a strategy.
Great plan
1. Impose high tariffs
2. Watch prices rise
3. Something, something…
4. No new US jobs
5. Something
Re: Great plan
6. Blame Biden
It is curious how tariffs have suddenly become fashionable in the US. It seems that nobody remembers the great job they did making the Great Depression great.
Nowadays, there are supply chains that have evolved over the years that are going to be disrupted and cannot be easily or quickly rebuilt. The inevitable result is that there will be a disruption of business activity as costs and prices get recalculated upwards.
I am reminded that the US pressured Japan to "voluntarily" restrict auto exports to the US during the 1980s. The result was higher costs for consumers and bonuses for auto industry executives and shareholders. The protected companies failed to take advantage of their good fortune to improve their products - as the unhappy owner of several North American cars in this period, I found that by the time I had gone 80,000 miles, the incessant repair costs made them completely uneconomic to operate.
Trump 2.0
This is just Trump looking for an excuse to try to use tariffs threats as a negotiating lever again. The previous time around he declared Canada and Mexico to be "threats to US national security" and slapped massive tariffs on imports from the two.
However both responded with tariffs of their own, carefully targeted against the districts and states of politicians whom Trump needed the support of, and Trump was force to cave and and back away with his tail between his legs. I suspect it will go the same way this time but only after extensive damage to all three economies.
Important Republican party members are already saying that they're not going to let Trump do whatever he wants on this. The biggest trade item for all three countries is autos and auto parts. The industry is so closely integrated in all three countries that the US auto industry would collapse if Trump were allowed to go ahead with it. The Chinese would be falling off their chairs laughing at the US self destructing on this.
You would think that Trump would have learned from his previous mistakes, but he's evidently learned nothing and forgot nothing.
And in case anyone imagines that Biden was somehow a paragon, he was just as protectionist as Trump, he was just a lot less stupid and self destructive in going about it.
This is the direction the US are going in regardless of who is in power, and it's why both Canada and Mexico have ongoing efforts to diversify trade away from the US. The US are not the future so far as Canada and Mexico are concerned, and it's things like this which is why.
Bring it on
Canada should just impose export duties to match their import duties. Should have done it a long time ago with their softwood lumber shenanigans. Americans want to pay more for things? Double it. If Americans are charging themselves 25% extra, charge them another 25% on top of that. See how long that lasts.
No keystone pipeline from Canada to usa, but the trans mountain pipeline expansion for bitumen to the port of vancouver has just come online. Canada has less need for American refineries. Also the coastal gaslink pipeline for lng to kitimat a port even closer to asia. The writing is on the wall.
The integration of the auto industry in the east, the disruption will be cataclysmic what did he call it "a blood bath". Chinese made cars will be cheaper anyway even with a 100% tarriff. The writing is on the wall.
Let alone agriculture. Seeds and fertiliser and equipment. Let's tariff war? Food isn't already expensive enough?
There are already Asian majority suburbs in Vancouver. If Trump thinks Canada will beg to stay dependant on the usa instead of continuing to diversify he may be surprised.
It's not 'because of fentanyl and immigration', it's just to make Trump look tough to his supporters. Essentially no fentanyl crosses the Canadian border to the US and not a lot of illegal immigration (the odd story about Indian families freezing to death on the way notwithstanding).
Don't repeat the Trump lie!
"America's neighbors now face 25% because of fentanyl and immigration, China just 10% on top of existing duties"
That's completely wrong semantics. It's not Mexico or China that "face" the tariffs, and will have to pay them, but the American companies and ultimately consumers that import and buy goods from said countries.
It's the exact lie that got Trump elected, but will completely backfire on Americans when actually implemented.
I think I'll be looking at my modest savings to minimise my exposure to such an unstable country. I suppose a lot of other people will be doing the same. By comparison Liz Truss was a model of rational government.