The president-elect of the United States, Donald Trump, set off alarms in Mexico, Canada and China by announcing this Monday that on the first day of his second presidency, scheduled for January 20, he will impose new tariffs on products from these three countries.
Trump said the measure will be part of his fight against illegal immigration and drug traffickingtwo of the pillars of the campaign that led him to win the elections on November 5.
Experts believe that, if carried out, the measure could cause a drastic increase in the prices of many goods, while some maintain that it is a mere negotiation strategy of the next leader in Washington.
The announcement of the next leader of the White House has generated concern in the Mexican, Canadian and Chinese governments, which have responded in different ways.
We analyze the main keys to Trump’s new tariff threat.
1. What did Trump announce?
The president-elect announced that, as soon as he takes office on January 20, he will be taxed with a 25% imports from Canada and Mexicoand will impose an additional tariff of 10% to those from Chinaaccording to a publication on his Truth Social network account.
Trump assured that it will be one of his “many first executive orders” and justified it as a measure of his fight against illegal immigration and drug trafficking through the “ridiculous open borders” of the United States.
“Thousands of people are crossing through Mexico and Canada, bringing crime and drugs to levels never seen before,” he wrote.
He added that the new tariffs will remain in effect “until we stop this drug invasion, particularly fentanyl, and all the illegal immigrants to our country.”
“Both Mexico and Canada have the absolute right and power to easily resolve this long-simmering problem. We hereby demand that you use this power (…) and until you do, it is time for pay a very high price”, he stated.
As for China, he claimed to have held numerous negotiations with its government about “the enormous quantities of drugs, particularly fentanyl,” whose components supposedly arrive in the United States from the Asian country, “but without any results.”
“Until they stop this, we will be charging China an additional 10% tariff, added to any other additional tariffs, on all of their many products that enter the United States,” he specified.
2. What did Claudia Sheinbaum respond in a letter?
Mexican President Claudia Sheinbaum responded to the threat of tariffs in a letter to Trump that she read at her morning press conference.
Sheinbaum insisted that it is impossible to resolve the “immigration phenomenon” or drug consumption in the United States “with tariffs or intimidation.”
“Cooperation and reciprocal economic understanding are required to address these great challenges. To one tariff, another will come in response and so on until we put common businesses at risk.”
He also warned that this measure would harm binational companies such as General Motors and Ford, affecting employment and economic stability in both countries.
He defended the importance of respecting what is established in the T-MEC, signed during Trump’s first presidency (2017-2021) and in force since 2020and reiterated his intention to dialogue with the next president’s team to preserve the commercial relationship.
He also highlighted that “the economic strength of North America lies in maintaining our commercial partnership” to “continue to be more competitive against other economic blocks.”
Sheinbaum responded to Trump’s accusations about illegal immigration by citing the 75% reduction in daily encounters of migrants at the border since December, according to data from Customs and Border Protection (CBP).
Regarding the “fentanyl epidemic,” he considered it “a consumer and public health problem in American society” in which Mexico collaborates “for humanitarian reasons.”
He recalled that Mexico has confiscated tons of drugs and weapons, and has arrested thousands of people related to drug trafficking, and stressed that chemical precursors for synthetic drugs “enter illegally” from Asia.
Finally, he asked that Trump also address “illegal arms trafficking” from the United States, the country from which “70% of those seized in Mexico” come.
3. What did the governments of Canada and China say?
The announcement by the American president-elect also generated concern in Canada and China, whose governments They warned of serious economic consequences.
The Canadian government stressed the importance of resolving tensions through negotiations.
His Prime Minister, Justin Trudeau, had a first telephone conversation with Trump about trade and border security, and both agreed to continue contacts.
A spokesperson for Trudeau noted that “the economy of Canada and the United States are deeply integrated, and these measures would harm both nations”.
Canada is the United States’ main trading partner, with an exchange of goods and services that exceeds US$700 billion a year and involves key industries, such as automotive and agricultural products.
For its part, the Chinese government alleged that “no one will win in a trade war or tariff,” according to Liu Pengyu, spokesperson for the Chinese embassy in Washington, in statements to the BBC.
“China believes that economic and trade cooperation between China and the United States is mutually beneficial in nature,” he noted.
However, this cooperation has been difficult to achieve in recent years: the 66.4% of imports of Chinese products in the US and the 58.3% of Chinese imports of American products are subject to tariffs.
Regarding Chinese-made components used to manufacture narcotics in the United States, Liu noted that anti-drug cooperation “is one of the important common understandings reached between President Xi Jinping and President Joe Biden during their meeting in San Francisco in 2023.” .
He assured that Beijing “has notified the United States of the progress made in law enforcement operations related to narcotics,” “has responded to United States requests to verify leads about certain cases and has taken action.”
“All of this demonstrates that the idea that China knowingly allows the flow of fentanyl precursors into the United States is completely contrary to facts and reality”, he stated.
4. What imports does the US receive from the three countries?
Canada, Mexico and China are, in this order, the main trading partners of the United States.
In 2023, the combined value of US imports of goods and services from these three countries was almost US$1.5 trillionaccording to the Washington Bureau of Economic Analysis.
In 2022, the last year for which there is a complete breakdown of the types of goods and services purchased, Canada’s top export to the United States was crude oil worth US$117 billion.
This represented 60% of the United States’ total gross crude oil imports.
From Chinaimports of computers and audiovisual equipment amounted to more than US$100 billion.
The main import of Mexico They were also computer equipment, worth almost US$37 billion.
In second place were vehicles, which Mexico exported to the US for a value of US$34 billion in 2022.
5. What would be the consequences of the tariffs announced by Trump?
Donald Trump’s proposal could have significant economic and political repercussions, especially in the United States, where experts warn of a possible increase in inflation, prolonged trade tensions and questions about compliance with the T-MEC.
If applied, the tariffs could significantly increase the cost of basic products such as food, automobiles and electronic goods in the United States, which would directly affect consumers, according to economists.
This could put upward pressure on prices in a context of fighting inflation and thereby force the Federal Reserve to maintain high interest rates, making credit even more expensive for households and companies.
On the other hand, the Agreement between Mexico, the United States and Canada (T-MEC), in force since 2020, establishes clear rules to avoid the unilateral imposition of tariffs between trading partners.
Trade policy expert Stephen Woolcock told the BBC that Trump’s proposed measures “are not in line with the existing agreement“.
Woolcock believes that the effectiveness of the USMCA depends on “trust and compliance by the nations involved,” and Trump’s actions could erode this basis of cooperation.
In any case, some analysts believe that tariffs could be used as a pressure tool to obtain concessions from the United States’ trading partners.
According to Randall Kroszner, former governor of the Federal Reserve, Trump likely uses these threats to achieve progress on sensitive issues such as immigration and drug trafficking.
Kroszner stresses that tariffs would have a smaller impact on the U.S. economy, where imports account for just 15% of GDP, compared to Mexico and Canada, which are much more dependent on trade with the United States.
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