President Donald Trump delivered on his threat to hit Canada and Mexico with sweeping import levies, imposing one of the largest increases in US tariffs since the 1930s in a dramatic escalation of a trade war that stands to upend ties with major economic partners.
The new tariffs 25% duties on most Canadian and Mexican imports and the doubling of an existing 10% charge on China to 20% impact roughly $1.5-trillion in annual imports, an expansive move signaling to markets that the Republican president is committed to wielding import duties to obtain fresh revenue and create domestic manufacturing jobs. Trump’s move prompted swift retaliation from Canada and China and may spur similar reprisals from Mexico as well as potential legal challenges. It leaves uncertain the fate of a trade pact Trump negotiated with Canada and Mexico in his first term and risks further straining the US economy and rekindling still simmering inflation.
Trump’s vow to move ahead with the tariffs accelerated a selloff in US stocks on Monday, with the S&P 500 down 1.8% on the day. Losses spread to Asian equities on Tuesday. The Canadian dollar and Mexican peso slumped after Trump who previously delayed the Canada and Mexico duties reaffirmed his plans to go ahead with the new import taxes. The tariffs bring American import levies to their highest average level seen since 1943, according to the Budget Lab at Yale. That would lead to as much as $2 000 in additional costs for US households. It also will mean significantly slower economic growth in the US, especially if other countries retaliate, according to a report published Monday.
Credit: Mining weekly