US President Donald Trump🔯 on Saturday signed an order to impose stiff tariffs on imports from Mexico, Canada and China, fulfilling a campaign promise but raising the prospect of increase prices for American consumers.
Trump is declaring an economic emergency to put duties of 10 per cent on all imports from China and 25% on imports from Mexico and Canada — America's largest trading part꧑ners — except for a 10 per cent rate on Canadian oil.
The Whi💎te House said Trump's order also includes a mechanism to escalate the rates ꧙if the countries retaliate against the US, as they have threatened.
Trump says the tariffs are to force the countries to do more to stop the flow of fentanyl into the US, b💫ut also dovetail with his embrace of protectionist measure𒐪s to boost domestic manufacturing and as a potential source of revenue for the federal government.
Why Trump Imposed The Tariffs
New trade penalties against Canada, Mexico and China that President Donald Trump plans to impose Saturday represent an aggressive early move against America's three lar🦩gest trading partners, but at the risk of higher inflation and possible disruptions to the global econom🔯y.
In Trump's v👍iew, the 25 per cent tariffs against the two North American allies and a 10 per cent tax on imports from Washington's chief economic rival are a way for the United States to throw aro♍und its financial heft to reshape the world.
“You see the power of th��e tariff,” Trump told reporters Fඣriday. “Nobody can compete with us because we have by far the biggest piggy bank.”
The Republican president is making a major political bet that his actions will not worsen inflation, cause financial aftershocks that could destabilize the worldwide economy or provoke a voter backlash. AP VoteCast, an extensive survey of the electorate in lastꦕ year's election, found that 🍨the US was split on support for tariffs.
It is possible that the tariffs could be short-lived if Canada and Mexico can reach a deal with Trump to more aggressively address illegal immigration and fentanyl smuggling. Trump's move a😼gainst China is also tied to fentanyl and comes on top of existing import taxes.
Trump is honoring promises ☂he made in the 2024 White House campaign that are at the core of his economic and national security philosophy, though Trump allies had played down the threat of higher import taxes as mere negotiating tactics.
The president is preparing more import taxes in a sign that tariffs will be an ongoing part of his second term. On Friday, he mentioned imported computer chips, steel, oil and natural gas, as well as against copper, pharmaceutꦍical drugs and imports from the European Union — moves that could essentially pit the U.S. against much of the global economy.
Trump's intentions drew a swift response from financial markets, with the S&P 500 stock in🍌dex slumping after his announcement Friday.
It is unclear how the tariffs could affect the business investments that Trump said would happen because of his plans to cut corporate tax rates and remove regulations. Tariffs tend to raise prices for consumers and businesses by making it more expensive to bring in💫 foreign goods.
Many 🌌voters turned to Trump in the November election on the belief that he could better handle the inflation that spiked under Democratic President Joe Biden. But inflation expectations are creeping upward in the University of Mꦍichigan's index of consumer sentiment as respondents expect prices to rise by 3.3 per cent. That would be higher than the actual 2.9% annual inflation rate in December's consumer price index.
Trump has said that the government should raise more of its revenues from tariffs, as it did before the income tax became part of the Constitution in 1913. He claims, despite 𝔍economic evidence to the contrary, that the US was at its wealthiest in the 1890s under President William McKinley.
“We were the๊ richest country in the 🐽world,” Trump said Friday. “We were a tariff country.”
Trump, who has asp🌠ired to remake America by using McKinley's model, is conducting a real-time experiment that the economists who warn tariffs lead to higher prices are wrong. While the tariffs in his first term did not meaningfully increase overall inflation, he is now looking at tariffs on a much grander scale tꦦhat could push up prices if they're enduring policies.
Trum🀅p has fondly called McKinley, an🥂 Ohioan elected president in 1896 and 1900, the “tariff sheriff.”
Brad Setser, a senior fellow at the Council on Foreign Relations, noted on the social media site X that the tariffs “if sustained, would be a massive shock — a much bigger move in one weekend than all the trade action that Trump took in his fi👍rst term.”
Setser noted that the tariffs on China without exemptions could raise the price of iPhones, which would test jus💎t how much power corporate America has with Trump. Apple's CEO Tim Cook attended Trump's inauguration last month. AP
