This time, Donald Trump’s intentions are very clear. As repeated throughout the speaking in recent months, the President of the United States wants to enter a real commercial showdown with several of its economic partners, starting with its Mexican and Canadian neighbors. This Saturday, February 1, he is to sign a decree imposing 25 % customs duties on products exported to his country by Ottawa and Mexico, in addition to already existing taxes. The measure could apply on February 18 and upset the economic balance of the American continent.
Friday, Donald Trump was sure of himself: “Nothing” will prevent the implementation of these new customs tariffs. “We have a significant deficit [avec le Canada, le Mexique et la Chine]and they send a massive quantity of fentanyl [de notre côté de la frontière]”, he justified, in reference to the alleged role of the three countries in the opioid crisis in the United States. The terms of these unpublished taxations remain to be specified. All the products of the two countries referred Concerned?
This case is emblematic of the subtlety of the consequences of the commercial policy wanted by Donald Trump, which will have effects on all of the economies of the three North American countries. Admittedly, the economic balance of power is to the advantage of Washington. In 2022, Canada exported almost three-quarters of its products to the United States, according to the Economic Complexity Observatory (OEC). Figures close to those of Mexico, which exported more than 76 % of its products to its American neighbor on the same exercise. The repercussions of increased customs duties are likely to create difficulties in many sectors in these two countries.
Loss of growth and threatened jobs
In Canada, exports linked to energy and natural resources will be particularly affected. Uranium, oil, plastic, steel, aluminum … Many materials, sometimes essential to the activity of American companies themselves, could be affected by these new customs duties. The automotive industry, whose assembly chain is often shared between sites in the United States and Canada, could also experience a spectacular crisis. 500,000 jobs in this branch would be endangered, according to figures from the Canadian province of Ontario. The number of workers threatened to lose their post in the country would be twice as high.
The resigning Canadian Prime Minister Justin Trudeau had tried to find a compromise with Donald Trump before taking office in the White House. He also went in person in early December to the billionaire’s personal residence in Mar-A-Lago, Florida, to negotiate a “deal” with the latter. A few hours after this meeting, described as “good conversation” by the Canadian leader, Donald Trump confirmed the intransigence of his position on customs duties. In a message published on his Truth Social network, he even described Justin Trudeau as “Governor of the State of Canada”, in reference to his desire to see the country become American.
Since then, the head of Canadian government said he was “ready for an immediate response” in the event of adoption of these new customs rights, without revealing the planned retaliation strategy. Ottawa would be tempted to hit hard, as this trade war could be devastating for its growth. According to the Canada Chamber of Commerce, the country’s gross domestic product could fall by 2.6 % with the application of these XXL customs tariffs. After Radio-CanadaJustin Trudeau would even consider, as a last resort, to impose an embargo on American oil and natural gas.
Towards a “deindustrialization” in Mexico?
On the Mexican side, president Claudia Sheinbaum also wants to believe still possible to achieve American concessions. “Agreements are found every day,” said the manager, while recalling that her team has provided “a plan A, a plan B and a plan C” according to the effective application of customs duties. Mexico, a crucial territory in the supply chain of many American companies, could know “a process of deindustrialization” with these new pricing barriers, estimates the economist Marcus Norland, questioned by the New York Times.
Many Mexican factories work directly with American customers, especially for making manufactured products. The automotive, energy or new technologies sectors are among the most affected by these measures. According to a Standard & Poor’s analysisthe loss of production of companies related to the manufacture of electrical equipment is estimated between 9 and 15 %. Impacts on fishing and agriculture would also be difficult to collect for Mexico City.
The dependence on the country’s exports in the United States in the latter area exposes Mexican producers to heavy losses. Today, 63 % of imports of vegetables present on the shelves of American supermarkets come from Mexico, against 47 % of fruits and nuts. Only one sector could benefit from such customs duties in Mexico: that of tourism. As the New York Timesthe drop in the value of the peso inherent in the new American pricing policy and its effects could strengthen the attractiveness of a low -cost stay on the Mexican coast.
Inflation for American consumers
Donald Trump’s customs bomb could also create other negative effects … on his own economy. In his overall desire to pass “America first”, the American president intends to promote “made in America” products by protecting them from cheap competition from his neighbors, or rival powers – he also plans This Saturday, new customs taxes up to 10 % for Chinese products. To the key, according to him? The creation of thousands of jobs in the United States and an “enrichment” of the Americans, relieved of part of the taxes thanks to these new tax revenues.
But at the same time, in a country where life is already expensive, inflation could increase under the effect of customs barriers. According to the estimates of the chief economist of the cabinet Ey Gregory Daco, quoted by AFP, an increase of 0.7 point of percentage of inflation should take place in the first quarter of the year 2025. American GDP could also back down 1.5 % throughout the year, then 2.1 % in 2026, “due to a slowdown in consumption and investment”. Not to mention the increase in energy prices for a number of American households. For residents receiving electricity produced in Canada, the bill could increase by 25 %.
No matter for Donald Trump: faithful to his protectionist doctrine, the Republican does not intend to stop there. Not only does he plan to “substantially increase” customs tariffs against Canada, Mexico or China-“or not. We will see,” he said on Friday-but he also threatens to impose new taxes vis-à-vis the European Union. “The EU has treated us in such terrible way,” he said, saying “absolutely” ready to impose new customs tariffs.
Faced with journalists, Donald Trump more specifically criticized the cost of VAT when exporting American products in Europe. This “costs us an absolute fortune,” pointed out the businessman. “We have a trade deficit with the EU of $ 350 billion. China is aggressive, but it is not just China. Other countries are also large attackers.” Again, no details have been specified on the conditions for setting up this part of the expected “customs wall” of its wishes. The shattering remarks of the US head of state have in any case worried the markets. Friday, despite a good start to the day, the Dow Jones, the S&P and the Nasdaq all finished in the red in New York after the White House declarations.