U.S President-elect, Donald Trump has announced that he would sign an executive order imposing a 25% tariff on all products coming into the United States from Mexico and Canada, and additional tariffs on China.
In a post on Truth Social, he vowed, “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”
Trump said that the tariffs would remain in place until the two countries clamp down on drugs, particularly fentanyl, and migrants crossing the border illegally.
In a follow-up post, Trump announced that the US “will be charging China an additional 10% Tariff, above any additional Tariffs.”
He said that the reason for the additional tariff was China’s failure to curb the number of drugs entering the US.
China is a major producer of precursor chemicals that are acquired by drug cartels, including in Mexico, to manufacture fentanyl, a highly potent synthetic opioid.
“I have had many talks with China about the massive amounts of drugs, in particular Fentanyl, being sent into the United States – But to no avail … Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.”
Donald Trump
In response, Liu Pengyu, a Chinese embassy spokesperson, said that China believes that China-US economic and trade cooperation is mutually beneficial in nature, adding, “No one will win a trade war or a tariff war.”
Liu noted that China had taken steps to combat drug trafficking after an agreement was reached last year between Joe Biden and Xi Jinping.
“The Chinese side has notified the US side of the progress made in US-related law enforcement operations against narcotics.
“All these prove that the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
Liu Pengyu
While the 10% tariff pledge is lower than his previous threats against China, analysts said that it was probably an opening gambit, especially with the Chinese economy in a much more vulnerable position than during the previous trade war waged between the two countries given the country’s prolonged property downturn, debt risks and weak domestic demand.
William Reinsch, senior adviser at the Center for Strategic and International Studies, said the move was classic Trump: “threaten, and then negotiate.”
Meanwhile, Canada’s Deputy Prime Minister, Chrystia Freeland, released a statement, saying that the country places the highest priority on border security and the integrity of its shared border with the US.
Freeland’s statement did not mention the tariffs directly. It also said that the Canada Border Services Agency, the US Drug Enforcement Administration and US Customs and Border protection “work together every single day to to disrupt the scourge of fentanyl coming from China and other countries.”
Trump’s Proposed Tariffs To Cost Typical US Households
The Peterson Institute for International Economics, a nonpartisan Washington DC-based research organization, estimates that Trump’s proposed tariffs would cost the typical US household more than $2,600 a year.
Also, Tahra Jirari, Director of Economic Analysis at an organization called the Chamber of Progress reacted to Trump’s tariffs, pointing out that they will lead to higher prices for consumers.
“Trump vows 25% tariff on ALL Mexico/Canada imports if elected. This means higher prices for Americans. Tariffs = taxes that YOU pay at the store. Cars, food, electronics – all cost more. Even your grocery bill would jump. Companies can’t absorb 25% – it hits your wallet.”
Tahra Jirari
A tariff is a tax placed on goods when they cross national borders. Import tariffs such as those proposed by Trump can have the effect of protecting domestic industries from foreign competition while also generating tax revenue for the government.
However, Economists widely consider them an inefficient tool that typically leaves consumers and taxpayers bearing the brunt of higher costs.
Countries generally levy retaliatory tariffs of their own in response to tariffs such as those Trump is proposing, which can spark a trade war – as happened between the US and China during Trump’s first presidency.
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