Trump to impose tariffs on Canada, Mexico,China tomorrow

Post Reply New Topic

.S. President Donald Trump tasked his economics team on Thursday with devising plans for reciprocal tariffs on every country taxing U.S. imports, ramping up prospects for a global trade war with American friends and foes.

"On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less," Trump told reporters in the Oval Office.

Trump signed a memo ordering his team to start calculating duties to match those other countries charge and to counteract non-tariff barriers such as vehicle safety rules that exclude U.S. autos and value-added taxes that increase their cost.

Thursday's directive stopped short of imposing fresh tariffs, instead kicking off what could be weeks or months of investigation into the levies imposed on U.S. goods by other trading partners and then devising a response.

Targets include China, Japan, South Korea and the European Union. The Republican president's latest round of market-rattling tariffs has ratcheted up fears of a widening global trade war and threatened to accelerate U.S. inflation.

Wall Street - anxious that tariffs may add to inflation and keep the Federal Reserve from cutting interest rates further - breathed a sigh of relief, for the moment, with U.S. stocks adding to the day's gains. A gauge of global stocks touched a record high, and yields on U.S. Treasury securities fell.

Howard Lutnick, Trump's pick for Commerce secretary, said the administration would address each affected country one by one and said studies on the issue would be completed by April 1. That is also the deadline Trump set on his first day in office for Lutnick and other economic advisers to report to him with plans to reduce the chronic trade imbalances that Trump sees as a U.S. subsidy to other countries.

Trump, who campaigned on a pledge to bring down consumer prices, said prices could go up in the short term as a result of the moves. "Tariffs are great," he said.
A White House official, who spoke to reporters before Trump's event in the Oval Office, said the administration would study countries with the biggest trade surpluses and highest tariff rates first.

Trump's tariffs would match the higher duties charged by other countries, he said, and would aim to counteract burdensome regulations, value-added taxes, government subsidies and exchange rate policies that can erect barriers to the flow of U.S. products to foreign markets.

"They effectively don't let us do business. So we're going to put a number on that that is a fair number. We're able to accurately determine the cost of these non-monetary trade barriers," Trump said.

OPEN TO TALKS
he broad announcement appeared designed at least in part to trigger talks with other countries. The White House official said Trump would gladly lower tariffs if other countries lowered theirs. The new tariffs would avoid a "one size fits all" approach for more customized levies, he said, though he did not rule out a flat global tariff.

"It’s a relief that the administration isn’t rushing to impose new tariffs, and we welcome the president taking a more nuanced, inter-agency approach," said Tiffany Smith, vice president for global trade at the National Foreign Trade Council. "Ideally, this process will result in us working with our trading partners to lower their tariffs and trade barriers as opposed to increasing our own."

Trump, who took office on Jan. 20, has already announced tariffs on all steel and aluminum imports beginning on March 12, imposed 10% tariffs on goods from China, and put a 30-day hold on planned tariffs on goods from neighboring Canada and Mexico.

Trump said on Monday he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals. On Thursday he said car tariffs would be coming soon.

"This is beyond negotiation. It's to be taken very seriously," said Josh Lipsky, director of the Atlantic Council's GeoEconomics Center and a former adviser to the International Monetary Fund who also served in the Obama White House.
"I do think every country has been put on notice. And if you were going to implement reciprocal tariffs on the scale he's talking about, this is actually how you would go about it," he said.

Indian Prime Minister Narendra Modi, who was in Washington to meet with Trump, oversees a government that imposes the highest tariffs on U.S. exports of any major U.S. trading partner. Trump acknowledged as much on Thursday.
Trade experts say structuring the reciprocal tariffs that Trump wants poses big challenges for his team, which may explain why the latest duties were not announced earlier in the week.

Experts say Trump could turn to several statutes, including Section 122 of the Trade Act of 1974, which would only allow a flat rate maximum of 15% for six months, or Section 338 of the Tariff Act of 1930, which provides authority to act against trade discrimination that disadvantages U.S. commerce, but has never been used.

Trump also could use the same International Emergency Economic Powers Act used to justify the tariffs imposed on China and pending for Canada and Mexico.

The White House official said that measure and others could be used.

BRUSSELS — The European Union said on Thursday it was ready to deploy its strongest trade weapon against the U.S. after President Donald Trump threatened to impose sweeping tariffs and scorned the EU as having been created to “screw” America.

“We have an Anti-Coercion Instrument, and we will have to use it,” Agriculture Commissioner Christophe Hansen said in Paris after meeting with his French counterpart Annie Genevard at the Salon de l’Agriculture farming exhibition.

Designed following the first Trump administration from 2017 to 2021, the bloc's “trade bazooka” provides for broad retaliation in response to trade discrimination, such as quotas and tariffs or restrictions on foreign investment.
The commissioner’s comments came a day after Trump threatened to hit the EU with sweeping 25-percent tariffs "on cars and all other things," provoking fury across the Atlantic — with politicians saying the time had come for Brussels to retaliate.

“We will not let ourselves be bullied, not with tariffs nor with threats about our legislation,” said Bernd Lange, a usually mild-mannered German Social Democrat who chairs the European Parliament’s international trade committee.

China and Canada moved swiftly on Tuesday to retaliate against newly imposed U.S. tariffs, announcing their own levies on U.S. goods that could further disrupt the United States’ trade with its top three trading partners.

A 25% U.S. tariff on almost all goods imported from Canada and Mexico took effect Tuesday just after midnight, along with an additional 10% tariff on goods from China. The three countries together accounted for more than 40% of total U.S. imports last year and are also the top three U.S. export markets.

China will impose additional tariffs of up to 15% on some U.S. goods, its government said, while Canada vowed tariffs of up to 25%. Mexican President Claudia Sheinbaum is expected to announce her response at a news conference in Mexico City on Tuesday morning, the country’s economy ministry said.

The new Chinese levies, which take effect on March 10, include a 15% tariff on chicken, wheat, corn and cotton and a 10% tariff on sorghum, soybeans, pork, beef, fruits, vegetables, and dairy and fish products. Chinese state media had reported earlier that U.S. agricultural products would be targeted.

China says the U.S. tariffs undermine cooperation between the world’s two largest economies and they hurt American businesses and consumers, as well as international trade.

“The Chinese people have never believed in coercion or intimidation, nor do we succumb to bullying and hegemonic tactics,” Chinese Foreign Ministry spokesperson Lin Jian said at a regular briefing in Beijing on Tuesday.

“Pressure, threats and coercion are not the right way to engage with China. If the U.S. attempts to exert extreme pressure on China, it is simply targeting the wrong country and miscalculating its moves.”

Lin also said China had “taken strong measures” to help stem the international flow of fentanyl, which Trump has cited as justification for the tariffs on China, Canada and Mexico, and that the U.S. was using fentanyl as an excuse to wage a trade war.

In addition to the new tariffs, China added 10 U.S. companies to its “unreliable entity” list and 15 to its export control list, mostly defense and intelligence firms with little exposure to the Chinese economy.

Beijing is also filing a lawsuit with the World Trade Organization over the new 10% tariff, as it did in response to a previous 10% tariff that President Donald Trump imposed on Chinese goods starting Feb. 4.

The combined 20% U.S. tariff on Chinese goods comes on top of tariffs Trump imposed during his first term that were maintained and in some cases sharply increased by former President Joe Biden.

Canada said it would move ahead with an earlier plan to impose 25% tariffs on 155 billion Canadian dollars ($107 billion) in American goods if the U.S. tariff took effect as scheduled.

Tariffs on $20.7 billion worth of goods will take effect immediately, while tariffs on the remaining $86.3 billion in U.S. products will begin in 21 days, Canadian Prime Minister Justin Trudeau said in a statement late Monday. They will remain until the U.S. trade action is withdrawn, he said.

“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs,” Trudeau said. “Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”

While precursor chemicals for fentanyl are known to be shipped from China to Mexico, where they are processed into the deadly opioid which is then smuggled into the U.S., Canada says it has virtually no role in the international flow of fentanyl.

According to U.S. customs data, only 0.2% of the more than 20,000 pounds of fentanyl seized at the U.S. border in the 2024 fiscal year came from Canada.

Trudeau said Canada had nonetheless stepped up its drug enforcement efforts, resulting in fentanyl seizures from Canada dropping a further 97% from December to January, to 0.03 pounds.

The tariffs on Canada and Mexico, which Trump issued in an executive order he signed on Feb. 1, had been put on hold for 30 days after the leaders of both countries announced moves to tighten border security. They also include a 10% tariff on Canadian energy imports.

U.S. stocks tumbled Monday after Trump said the tariffs on Canada and Mexico would go ahead as planned, with the Dow Jones Industrial Average falling 650 points, or 1.48%, and the S&P 500 dropping 1.76% for its worst day so far this year.

In Asia, Japan led declines in markets around the region with stocks falling almost 2%, CNBC reported. Stocks in mainland China and Hong Kong were muted.

The U.S.-China tariff tit-for-tat comes as Chinese leaders and lawmakers gather in Beijing this week for the country’s biggest political event of the year, the National People’s Congress, where the ruling Chinese Communist Party will signal its priorities and goals for the year, including its approach to the Trump administration.

Though China spared U.S. agriculture in its response to the first 10% tariff, “Trump’s impatient tariff offensive may be changing the calculus” and the U.S. farming sector “should start to feel the pinch,” said Tianchen Xu, senior economist at the Economist Intelligence Unit in Beijing.

“Sounds like it’s telling the U.S. that ‘we’re really going to hit you hard if you don’t stop,’” he said in an email.

In Canada, meanwhile, retaliation against U.S. tariffs could also extend to its individual provinces. Ontario Premier Doug Ford told NBC’s “Meet the Press NOW” on Monday that Canada would “respond like they’ve never seen before.”

He said he was prepared to retaliate by cutting off the transmission of electricity from his province to the U.S. as well as shipments of nickel, which “will shut down manufacturing because 50% of the nickel you use is coming out of Ontario.”

“I’m sorry to the American people that your president has decided to do this,” Ford said. “I apologize, but he’s giving us no choice.

The S&P 500 fell 1.7% Tuesday, officially erasing all the gains it had accrued since Donald Trump was declared winner of the 2024 presidential election in November.

A second straight day of heavy selling came as Trump made good on threats to impose sweeping tariffs on America's largest trading partners.

A total of $3.4 trillion in value has now been wiped out since Nov. 6, the day after the election was held, according to data from Bloomberg.

Other major indexes fell in tandem: The tech-heavy Nasdaq Composite declined 1.5% — edging closer to correction territory, meaning it is close to being 10% lower than its last high; while the blue-chip Dow Jones Industrial Average fell 1.8%.

The biggest losers included automakers like GM and Ford, both of whom have significant manufacturing facilities in Mexico. Chipotle, which sources about half of its avocados from Mexico, slipped more than 2%.

Target and Best Buy were also down. Earlier Tuesday, the CEOs of both those companies warned prices for goods on their respective shelves would likely increase as a result of the new tariff measures.

The sell-off comes amid other signs of a softening economy. A closely watched report of monthly manufacturing activity flashed warning signals in its latest measure, while consumer confidence indexes show Americans turning more cautious about their finances

Canada will be eating European, not US chocolate

Lindt to supply chocolate to Canada from Europe to sidestep tariff hit
https://www.globalbankingandfinance.com ... 2ca99f1c3d

Prime Minister Justin Trudeau slammed Donald Trump's sweeping tariffs on Canada, calling it a "very dumb thing to do" and vowed to conduct a "relentless fight" to protect its economy.

The Canadian prime minister announced retaliatory tariffs on US exports and warned that a trade war would be costly for both countries.

But Trump pushed even further in a post on Truth Social, saying: "Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!"

Trudeau accused the US president of planning "a total collapse of the Canadian economy because that will make it easier to annex us".

"That is never going to happen. We will never be the 51st state," he told reporters on Tuesday.
"This is a time to hit back hard and to demonstrate that a fight with Canada will have no winners."

He said that Canada's main goal remains to get the tariffs lifted so that they "don't last a second longer than necessary".

Responding to the accusations, Trudeau said on Tuesday there was "no justification" for the new tariffs, because less than 1% of the fentanyl intercepted at the US border comes from Canada.
Trudeau's words were echoed by Mexican President Claudia Sheinbaum, who said there was "no motive, no reason, no justification" for Trump's move. Speaking on Tuesday, she too vowed to issue her own "tariff and non-tariff measures" - but said further details would be given on Sunday.

Trump's tariffs are likely to push up prices for consumers in the US and abroad, said John Rogers, an economics professor at American International University.

The items most likely to be affected the soonest are food - the fruits, vegetables and other produce the US imports from Mexico - followed by the large amounts of oil and gas imported from Canada, Prof Rogers said.

"Prices could go up pretty soon", Prof Rogers warned, though he was reluctant to say by exactly how much or how quickly.

"We are in pretty uncharted territory," he told the BBC.

The bigger concern for prof Rogers was the potential damage he said was being done to America's longstanding trade partners.

"This is kind of sticking your finger in the eye of your neighbour," he said, adding that, in a potential US-Canada-Mexico trade war, "everybody is a loser".

The three countries targeted are America's top trading partners, and the tit-for-tat measures also prompted fears of that very trade war.

"There's no way you can win a trade war. Everybody suffers, because everybody's just going to wind up paying higher prices and sacrificing quality," Prof Rogers said.

Canada’s retaliatory measures include a 25% reciprocal tariff that will be imposed on C$155bn (US$107bn; £84bn) of American goods:
A tariff on C$30bn worth of goods will become effective immediately

Tariffs on the remaining C$125bn of American products will become effective in 21 days' time
Canada's Immigration Minister Marc Miller warned that as many as a million jobs in Canada were at risk if the tariffs were implemented, given how intertwined trade was between the two countries.

"We can't replace an economy that is responsible for 80% of our trade overnight and it's going to hurt," he said on Monday.

Speaking to the AFP news agency, a car manufacturing employee in the Canadian province of Ontario said people were indeed "pretty scared" of being laid off. "I just bought my first house," Joel Soleski said. "I might have to look for work elsewhere."

The sector is one that could be badly affected by the new tariffs regime in North America. Car parts may cross US-Canada border several times during the manufacturing process, and so might be taxed on multiple occasions.

Ontario Premier Doug Ford, whose province is home to Canada's auto manufacturing industry, told reporters on Tuesday that he anticipates assembly plants will "shut down on both sides of the border" as a result of the tariffs.

The tariffs were called "reckless" by the Canadian Chamber of Commerce, whose president Candace Laing cautioned that the move would force both Canada and the US towards "recession, job losses and economic disaster".

Ms Laing warned they would also increase prices for Americans, and force US businesses to find alternate suppliers that she said "are less reliable than Canadian ones".

Canadian provincial leaders have vowed their own responses.

Ford of Ontario mooted the possibility of cutting off Canadian electricity supplies and exports of high-grade nickel to the US, as well as putting an export levy of 25% on electricity sent to power homes in Michigan, New York and Minnesota.

Canada exports enough electricity to power some six million American homes.

Ontario and other provinces have also moved to remove US-made liquor off their shelves. In Nova Scotia, Premier Tim Houston said his province will ban American companies from bidding on provincial contracts, as will Ontario.

Ford also announced that a C$100m ($68m; £55.1) contract with Elon Musk's satellite internet company Starlink will be cancelled.

Meanwhile China - which now faces tariffs of 20% after Trump doubled an earlier levy - has vowed to fight any trade war to the "bitter end". It has announced its own counter-measures - including tariffs on a range of US agricultural and food products.