President Donald Trump has taken his administration’s trade policy to uncharted territory by imposing massive tariffs on imports from some of America’s largest trading partners, including Canada, Mexico, China, and the European Union. The protectionist policies aimed at safeguarding American industries and limiting trade advantage have evoked a two-pronged reaction both within the country and abroad.
Trump set a tariff of 25% on imports from Mexico and Canada to the US and 10% on imports of Canadian energy to take effect on Feb 1. Chinese imports were also set at a tariff of 10%. Tariffs by the Trump administration were set under the International Emergency Economic Powers Act and termed illegal immigration and drug trafficking as the primary rationale. The tariffs to Canada and Mexico were suspended for thirty days before they took effect. The tariff on China did take place.
In conjunction with increased trade tensions, on Feb 10, the President signed a proclamation imposing a 25% tariff on steel and aluminum imports effective from Mar 12. The proclamation canceled earlier exemptions and targeted supporting domestic metal industries and defense contractors like Northrop Grumman.
Intending to address purported global trade imbalances, Trump directed the administration to create a plan for retaliatory tariffs on Feb 13. This proposal will endeavor to copy tariffs charged by foreign countries on American products and levy higher tariffs on American exports to these foreign nations. Some countries most likely affected include India, Brazil, Vietnam, and Argentina, with massive tariffs against US imports. The plan aims to lock in this policy by Apr 1.
The response from the rest of the world has been fast and fierce overall. The EU condemned the US tariffs and threatened to hit back. EU President Ursula von der Leyen said the union would “defend its interests” and take action if necessary. Canada and Mexico denounced the tariffs, with Canadian Prime Minister Justin Trudeau calling them “unjustifiable” and threatening strong reprisal. Mexico has also threatened to retaliate based on harm to bilateral trade.
The Chinese government has also resisted the tariffs and vowed to sue the United States at the World Trade Organization. Some of America’s exports, such as coal and natural gas, have also been placed on retaliatory tariffs by China, a tax that a government charges on imports to punish another country for taxing its exports. Additionally, the Chinese government has opened investigations into American companies in China.
Domestically, there is a divided view. The supporters of the tariffs argue that it is a move to protect American industries, end the trade deficit, and combat predatory trading. They believe it will compel industries to begin manufacturing in the US, thus creating jobs and boosting economic growth.
Opponents have warned of possible negative impacts, such as higher consumer prices and stress with key allies. Some economists have warned tariffs will increase the cost of foreign goods to consumers and businesses dependent on global supply chains. According to former senators Phil Gramm and Former Treasury Secretary Larry Summers, these tariffs will make “Productivity, wages, and economic growth fall while prices rise… they also poison our economic and security alliances.”
With Mar 12 looming as the tariff date for steel and aluminum and the retaliatory tariffs to be completed by Apr 1, the world holds its breath. Whether a full-scale trade war is a possibility or not remains to be seen, depending on how the impacted countries will respond and if diplomatic moves are sufficient to ease tensions. The Trump administration is adamant about it, as it believes it should offset the previous trade deficits and put American economics foremost. The fate of global trade relations and a potential new world order of economics could be sealed in the coming weeks.
