This was one of the major promises of Donald Trump’s campaign, and he seems ready to keep it as quickly as possible. The future American president confirmed this Monday, November 25, that his first economic measures after his inauguration in January would be to increase customs duties on products coming from China but also from Canada and Mexico, decisions that he justifies by the crises linked to opiates and immigration.
“On January 20, as one of my many first executive orders, I will sign all necessary documents to impose 25% tariffs on ALL products entering the United States on Mexico and Canada,” the president wrote elected in a publication on his Truth Social network. “This tax will remain in effect until drugs, especially fentanyl, and all illegal immigrants stop this invasion of our country!” he added.
In a separate post, he announced an increase in customs taxes of 10%, which is added to those already existing and to those additional that he could still decide, on “all the numerous products arriving from China to the United States “.
“No one will win a trade war”
Donald Trump explained that he had often raised the problem of the influx of drugs, notably fentanyl, one of the main culprits of the opioid crisis in the United States, with Chinese leaders who promised to punish him severely, “until the death penalty”, the “traffickers”. “But they never got to the bottom of things.” National security reasons can be invoked to deviate from the rules set by the World Trade Organization (WTO) but countries generally refrain from using this exception as a regular tool of trade policy.
The increase in customs duties, which he often described as his “favorite expression” during his campaign, is one of the keys to the future economic policy of the president-elect, who is not afraid of relaunching trade wars, notably with China, started during his first mandate.
At the time, he justified this policy by the trade deficit between the two countries and Chinese commercial practices that he considered unfair, also accusing Beijing of theft of intellectual property. China responded with customs duties with harmful consequences for American farmers in particular. Joe Biden’s administration had maintained certain customs duties on Chinese products and had imposed new ones targeting certain products.
“No one will win a trade war,” Chinese diplomacy warned on Tuesday in the wake of the American president-elect’s statements. “China believes that trade and economic cooperation between China and the United States is mutually beneficial in nature,” said a spokesperson, Liu Pengyu.
“A huge risk”
In the evening, Justin Trudeau’s government for its part considered that the relationship between the two countries was “balanced and mutually beneficial, especially for American workers.” Before recalling as a warning that Canada was “essential for the energy supply” of the United States. In the country, where 75% of exports go to the United States, the news sent a shock wave. Quebec Prime Minister François Legault said this announcement represented “an enormous risk” for the Canadian economy. His British Columbia counterpart, David Eby, said that “Ottawa must respond firmly.”
Mexico “has no reason for concern”, for its part tried to reassure President Claudia Sheinbaum the day after the American election. The three countries have been linked for thirty years by a free trade agreement, renegotiated under pressure from Donald Trump during his first term.
Last week’s appointment as Commerce Secretary of Howard Lutnick, CEO of the investment bank Cantor Fitzgerald and a keen critic of China, also confirmed the president-elect’s desire to try to bend his trading partners to obtain better agreements and relocalize production to the United States.
Concerning China, Donald Trump has promised customs duties of up to 60% for certain products, or even 200% on imports of vehicles assembled in Mexico. He also wants to reintroduce customs duties of 10 to 20% on all products entering the United States and the European Union has already said it is “ready to react” in the event of new trade tensions. Promises that make many economists fear an inflationary threat.