On Tuesday, President Trump made one of his biggest gambling of his presidency, launching caring tariffs without a clear justification for imports from Canada, Mexico and China, which launched a trade war that risks the underworld of the Economics of the United States.
His actions established diplomatic relations with the largest American trade partners, sent markets that overturned and caused retaliation on US products – leaving companies, investors and economists confused why Mr. Trump would create such reversals without extended negotiations or clear reasoning.
Mr. Trump offered various explanations of tariffs, saying that the punishment for the failure of other countries is to stop drugs and migrants to move to the United States, the way they will produce production in America and retaliation for countries exploited by the United States. On Tuesday, he cited the hostility of Canada towards US banks as the second reason.
Prime Minister Justin Trudeau from Canada said that it was difficult to understand Mr. Trump’s explanation for Tariff, but claimed that his intention was to crush Canada. “What he wants to see is to see the total collapse of the Canadian economy, because this will make it easier for us to contribute,” Mr. Trudeau said during a press conference on Tuesday. “This will never happen. We will never be 51. The state.”
Howard Lutnick, a store secretary, said on Tuesday afternoon that the president could reach some accommodation with Canada and Mexico and announce it on Wednesday. “I think he will understand, you do more, and in some way we will meet you in the middle,” said Mr. Lutnick.
Canada announced a series of retaliation tariffs on American imports worth $ 20.5 billion, and Mr. Trudeau said that the upcoming other “non-Tariff” measures were.
“Yes, he can harm the Canadian economy, but he will find out quickly, because US families will quickly find out, it will harm the people on both sides of the border,” said Mr. Trudeau.
The stock around the world collapsed. In the United States, the financial sector was one of the worst hit, along with a series of companies, including Cruise Lines and Big Tech. The S&P 500 fell 2 percent before moderating losses in the afternoon. The UD added 1.8 percent of the loss of 1.8 percent, which was the sharpest drop this year.
The betting that Mr. Trump seems to be so economically strong and critical of America for an international trade that he can schedule tariffs as Cudgel to solve almost every problem. But a mixture of mercantilism and tactics of harassment of Mr.
The President imposes a steep tax on imports of the largest American trade partners at a time when inflation is yet to be supervised, a decision that many economists say will further increase the costs of US households and interfere with economic growth.
“The US people are counting on the fact that President Trump will reduce the costs and increase the US economy,” said Michael Hanson, a senior executive vice president of public relations relations at the Association of Retail Industry. “Tariffs to Canada and Mexico and the goals have put in serious danger and risk by destabilizing the economy of North America.”
Anxiety business groups held emergencies on Tuesday to determine their answers to trade moves, which impose 25 percent of tariffs on products from Canada and Mexico, adding another 10 percent of tariffs to the prior levies at China. Some groups were considering taking legal proceedings to challenge the National Security Administration that Trump’s administration invokes to bring tariffs.
Others tried to face what would mean for their lower lines. The seller’s Target warned on Tuesday that the tariffs could harm their efforts to recover from a heavy 2024, saying that consumers could Pull up on consumption In the midst of wider uncertainty about economics and that the company could increase the prices of some products as early as this week. Executive director Best Buy, Corie Barry, said at a conference call that the price increase were “very likely”, but that it was difficult to say how big it would be.
Kathy Bostjancic, a major economist throughout the country, estimated that if the tariffs were maintained and resting, economic growth would be a full percentage point lower than it would otherwise be. This would suggest that the American economy would grow only 1 percent in 2025. In the age of 2024, it increased 2.5 percent.
Mrs. Bostjancic also estimated that tariffs could stimulate the increase in prices on daily items that would cost an additional $ 1000 a year to households.
Some companies and unions that would benefit from Tariff have praised them. United United Auto Workers said they were “glad to have been an American president to take aggressive measures for the end of a free trade catastrophe that fell like a bomb on the working class.”
And Mr. Trump did not show the signs of withdrawing on Tuesday, saying that companies could simply avoid tariffs if they had built their factories in the United States.
“If the companies move to the United States, no tariff !!!” Mr. Trump wrote on Tuesday on a true social.
A few hours later, Mr. Trump warned that if Canada revenge with his own higher tariffs, the United States would increase his “reciprocal” tariff by the same amount.
Mr. Trump’s main economic assistants tried to explain the decision on Tuesday. Mr. Lutnick said at CNBC that the tariffs were not a “trade war”, instead of a conflict, calling a “drug war”.
If Canada and Mexico can prove to the president that they can stop the flow of fentanila, “then, of course, the president can remove these tariffs,” said the trade secretary. But he said the United States did not see “a statistically relevant decrease in death in America.”
Official statistics show that they died in the death of the USA have reduced significantly During the 12 months that ended in September and crossings on the border of the US-Mexico they fell.
Mr. Lutnick said the President would take other actions related to the store against Canada and Mexico in April. “Canada and Mexico had an invitation to trade with incredible economy, the United States of America and abused that call,” said Mr. Lutnick.
Everett Eissenstat, a Squire Patton Boggs partner and former economic advisor Mr. Trump, said the president appeared dissatisfied with the progress of other countries in the fight against drug trade, but said he could have other goals.
“I think it’s a fentanil, but it’s a wider picture,” he said.
Mr. Trudeau, along with President Claudia Sheinbaum from Mexico, implied that the administration made a false pronunciation for the tariff.
After teaching a list of the recent success of Mexico in the breakdown of drug trade, Mrs. Sheinbaum rejected what she called “Fentanil argument”, which Mr. Trump called to justify the imposition of tariffs.
“For humanitarian reasons, we cooperate to prevent illegal drug trafficking in the United States,” she said in a statement. “However, as we have stated on several occasions, the Government of that country must also take responsibility for an opioid crisis that caused so many deaths in the United States.”
Mr. Trudeau called Mr. Trump’s explanation “completely false, completely unjustified, completely false.”
One of Mr. Trump’s main goals for the tariff is to force more domestic production. He also considers a trade deficit as US “subsidies” to other countries and believes that tariffs can help offset the cost of reducing taxes and assistance in paying a national debt of $ 36 trillion.
Tariffs are likely to encourage some companies to open factories in the United States, to serve US customers. But Canada, Mexico and China also published plans for revenge on American exports, hitting a wide part of US sectors, including agriculture, retail and cars.
The economic influence of the tariff depends largely on how the global trade changes to take into account increased costs and how consumers adapt. Citing the Vietnam and Mexico trade redirection during the trade war of Mr. Trump in his first administration, economists from macroeconomics Pantheon predict that these tariffs will lead to the fall of the U.S. from Mexico’s imports to 13 percent, a 2 percentage point. They also expect American imports from Canada to fall to 10 percent.
John C. Williams, President of the New York Federal Bank, warned on Tuesday that the tariffs were likely to lead to higher US prices, but that the size was very uncertain.
Speaking at an event that led Bloomberg, he said he began to influence the influence of tariff on inflation “because I think we will see some of these effects later this year.”
Mr. Williams emphasized that Fed also paid attention to how the tariffs would affect economic activity, including if companies continue to invest or if consumers continue to consume. “I think there is another great uncertainty,” he said.
Mr. Trump is probably correct in his calculation that Tariffs will harm US trade partners more than the United States. Because the United States are such a large country with different resources, it depends far less on trade than many other advanced economies. The tariffs could also strengthen the US dollar, which is a world -old reserve currency, which is why imports look cheaper and belittling part of the impact of the impact.
The trade of goods and services accounts for about a quarter of American economic activities, compared to approximately 70 percent for Mexico and Canada and 37 percent for China. Canada and Mexico send about 80 percent of exports to the United States, making them extremely dependent on the United States.
Foreign governments have already responded to the threat of Mr. Trump’s tariff, quietly working on the diversification of their trade relations, seeking partners who are not the United States. Mexico has Updated your trading agreement With the European Unic and pushed herself into trade conversations with Brazil. Europe has reached a special agreement with South America and Switzerland.
However, the negative influences of tariffs are probably inevitable, especially for Canada and Mexico. An Analysis of the Peterson Institute of International Economics In February, it was found that 25 percent of tariffs to all American imports from Canada and Mexico, which were aligned with similar tariffs from these countries, would have caused the US economy in the coming years, although the Canadian and Mexican economy would decrease more.
The tariffs pulled a quick condemnation of Democrats in Congress, while the Republicans sought to defend themselves.
Senator John Thune, a Republican from the southern Dakota and the leader of the majority, said that Mr. Trump’s tariffs were “oriented about specific goals, in this case to reduce the amount of fental that comes in this country, through our borders. And so these tariffs are, I think, hopefully temporary.”
“We hope, when everything is said and done, it will not be something that will create a lot of disorders,” he said.
Senator Ted Cruz, a Republican from Texas, also said that he hoped that the tariff would not last for a long time.
“Texas performs a huge trade with Mexico and Canada,” Mr. Cruz said. “So, I hope these tariffs are as an incentive for which President Trump said they were thoughtful to be.”
Colby SmithJoe Rennison and Catie Edmondson contributed to reporting.
