United States President Donald Trump has delivered on his campaign promise to introduce tariffs, by slapping a 25 percent duty on imports from Canada and Mexico, and a ten percent impost on goods from China. Industry groups quickly responded by saying this is not a great idea.
Trump announced the tariffs in a Saturday Executive Order and accompanying fact sheet.
The latter states the tariffs are needed “to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”
The tariffs and the rationale for them were widely expected, and we reported analysis of their impact before Trump’s announcement that suggested they could increase the price of a laptop by 68 percent for US shoppers, and slow economic growth in the US and elsewhere.
Industry reaction to Trump’s announcement expressed concerns about their impact.
Tech lobby group the Information Technology Industry Council (ITIC) called for the Trump Administration to “aim for clear, constructive outcomes in its negotiations with foreign governments, avoid trade restrictions and weakened North American economic ties to the extent possible, and roll back the tariffs when outcomes are achieved.”
ITIC warned of “harms that sustained tariffs would have on U.S. consumers, workers, manufacturers, and exporters.” The org also seemingly protested it’s not been consulted.
“As these actions are implemented, it is essential to bring industry and stakeholders to the table to help the government reach its desired result, limit unintended consequences, and develop a holistic and successful trade policy approach,” its reaction to the tariffs states.
The National Manufacturers’ Association wrote that its members “understand the need to deal with any sort of crisis that involves illicit drugs crossing our border” but also feels “protecting manufacturing gains that have come from our strong North American partnership is vital.”
That partnership, the association wrote, means “one-third of critical U.S. manufacturing inputs now come from Canada or Mexico, rather than from competitors like China that often engage in unfair trade practices.”
Tariffs on Canada and Mexico, which share a free trade agreement with America, therefore threaten to “upend the very supply chains that have made U.S. manufacturing more competitive globally.” The association feels its smaller members will struggle to “find alternative suppliers or absorb skyrocketing energy costs” and will therefore “face significant disruptions. “
“Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
The US Chamber of Commerce was rather more blunt.
In a statement titled Tariffs Are Not the Answer the org’s senior veep John Murphy wrote “The President is right to focus on major problems like our broken border and the scourge of fentanyl, but the imposition of tariffs … won’t solve these problems, and will only raise prices for American families and upend supply chains.”
The National Retail Federation responded to the tariffs with support for the Trump Administration’s efforts to make international trade more fair, but also opined that “Imposing steep tariffs on three of our closest trading partners is a serious step” and warned called for “solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
Counter-tariffs on the way
The nations subject to the tariffs aren’t happy.
Canada announced 25 per cent tariffs of its own covering on US goods including spirits and peanut butter that mostly come from US states where Trump’s Republican Party holds power.
Mexico pointed to recent efforts to control illegal drug imports, claimed the USA has armed drug gangs, and called for talks rather than tariffs.
President Claudia Sheinbaum Pardo also made pointed remarks about the USA’s faltering efforts to address drug use.
China took a similar tack, as a foreign ministry spokesperson pointed to its efforts to stop the flow of drugs and the chemicals needed to make them. The spokesperson also opined that “The U.S. needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes.”
The Middle Kingdom believes the tariffs are illegal under World Trade Organization rules.
“The U.S. needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes,” the spokesperson wrote.
Tariff help for Big Tech next?
Trump has also suggested he may impose tariffs on the European Union, an act that Tom Wheeler, a visiting fellow at research org the Brookings Institution last week suggested could be used to push back against Europe’s many regulations restricting the activities of big tech companies.
Facebook CEO Mark Zuckerberg is all for this, expressing a desire to “push back against foreign governments going after American companies to censor more.”
As it happens, on Sunday the President of the European Council, António Costa and Canadian Prime Minister Justin Trudeau had a chat.
Canada’s readout of the conversation states that Trudeau “discussed the imposition of U.S. tariffs and Canada’s response.”
After he did so, “The leaders underscored the importance of continued co-operation to promote security and economic prosperity for people on both sides of the Atlantic.”
Which is pretty much what the US industry lobby groups quoted above also want. ®
