Donald Trump has an indifferent belief in trade policies.
He also tends to pretend to be “crazy man” to increase the leverage of negotiations.
This has made it difficult to determine whether his proposal for a full 25 % tariff on imports of Canada and Mexico is sincere. The policy should have been enabled on Tuesday. However, the diplomatic gust of diplomacy on Monday has an agreement that has postponed the onset of tariffs for 30 days, and the United States and their neighbors worked to strengthen security along the northern and southern borders of the United States.
In exchange for these tariff delays, the Mexican government agreed to dispatch 10,000 national security squads on 10,000 borders, while Trump pledged to stop the flow of American firearms in Mexico. Canada, on the other hand, promised to carry out a 1.3 billion border security plan (it was already enacted in December). Trump said in his true social platform, “I am very satisfied with this first result, and the tariffs announced on Saturdays can configure the final economic trading with Canada. It will be paused for a day. “
For now, Trump's open desire to overturn North American trade without forcing Canada to become a US state seems to have been a strategy for negotiations rather than agenda. Or, at least, Trump did not seem to have committed the agenda to stick to the overwhelming opposition of the industry to stick to it.
This said that Trump did not withdraw the proposed tariff -he just shelfed for a month. There are powerful cases to think that these tariffs will never be enforced. But if it's more modest, there's a fear that he might revive the North American Trade War plan.
Why Trump's 25 % of the tariffs do not have (perhaps) effects
There are at least three reasons for Trump to delay 25 % tariffs in Canada and Mexico to indefinite periods.
- Trump's proposed tariffs will not benefit anyone, imposing sudden costs to US consumers and manufacturers.
- The Trump administration clearly framed these tariffs as a tactic to bring out narrow concessions from Mexico and Canada, not for economic reform strategies.
- During his first term, Trump threatened to repeat a large tariff, but only retreated after a concession from a US trade partner.
The economic impact of Trump's tariffs will be punished. According to the Peterson International Economic Research Institute, his newly proposed duties will cost more than $ 1,200 per year for general US households. And this de facto tax increase will be borne by the former, because the former spends a higher percentage of income in foreign consumer goods, and will be lower than wealthy families.
Economic ethnicists may make this framework as the price required to revitalize the US manufacturing industry. However, high tariffs in Canada and Mexico will also cause catastrophic results to US producers. The North American economy has been consisting of estimation of tariffs close to zero for 30 years. American car manufacturers have built a supply chain that extends across the border between the northern and southern part of our country. Various stages in the production of automotive components are often performed in different countries, and they are sent eight times over the border before completion. The product has been completed.
If a US automaker needs to pay 25 % of taxes every time a car component is purchased from a Canada or Mexican supplier, production costs will rose sharply. According to one, Trump's tariffs on Canada and Mexico add $ 600 billion to the industry. And companies will try to give their consumers the cost. According to Bloomberg, a consultant company Wolfe survey estimates that the price of new cars will increase by about $ 3,000.
On the other hand, the National Housing Construction Company Association, when the United States is suffering from a sharp shortage of housing (and reconstructing the reconstruction of the United States on the weekends (and on the weekends of Canada and Mexico, is struggling with a sharp shortage of houses. He warned that it would be a deceleration of housing construction.
Wider, Trump's tariff will increase the value of the dollar. In other words, US products are more expensive for foreign consumers (and it is before the retaliation tax caused by Trump's movement). Thus, his policy is to reduce the intensity of American exporters products in the global market, and at the same time impose taxes on foreign -made inputs.
It is reasonable to suspect that Trump's tariffs will eventually be withdrawn, given that they will hurt almost all voters who have allied with his party.
The second reason why Trump's tariffs against Mexico and Canada would never be effective was that they officially intended to fight the “drug war”, not the trade war. Trump claims that our neighbors in the north and south have relocated immigrants to the United States, which are not documented with Fentanyl, which constitutes the “state emergency.” This was a legal basis for Trump to immediately establish tariffs under the sponsorship of the International Emergency Emergency Economic Power Law (IEEPA).
If Trump's tariffs are not to reconstruct the North American economy, but to persuade Canada and Mexico to increase border management initiatives, most of the three countries negotiate permanent economic peace. Not difficult.
The third reason Trump thinks that he will withdraw his tariffs in Canada and Mexico is that we have seen this movie before.
In 2019, Trump promises that if Mexico did not reduce the number of unwritten immigrants in the United States, 5 % of tariffs would be given to all Mexican imports and steadily increased to 25 %. did. The tariff threat was deleted after Mexico's Andres Manuel Lopez Oblador agreed to revive immigration policies in Mexico.
Furthermore, in 2017, Trump Trade with the United States and Corair if he did not to tell the top trade negotiator Robert Light Haiser to tell the Korean officials that the U.S. President was “very crazy”. It is reported that the contract could withdraw from “any moment”. Get T.
Thus, in the past, Trump tried to make his intentions on trade policy more extreme to get negotiations leverage.
Why is Trump's tariff rise again?
There are still three reasons that Trump thinks that Trump may still revive his North American trade war:
- Trump repeatedly suggests that his policy is not motivated by narrow concerns regarding the safety of the border, but rather motivated by magnificent economy and empire's ambitions.
- Since the late 1980s, Trump has fundamentally proposed a protectionist trade policy for his acclaim for his subject as a strategy for negotiations with foreign leaders.
- During his first term, Trump often tried to take rapid actions in both trade and foreign policy. This time, the inner circle of Trump seems to be not very interested in rejecting his most extreme urge.
The White House staff struggled to describe Trump tariffs as a response to the Fentanil crisis, such as Kevin Hasset, the director of the National Economic Council, but this seems to be legal.
On the weekend, Trump posted to the true social:
Pay hundreds of millions of dollars to assist Canada. why? There is no reason. You don't need anything they have. We have unlimited energy. You should make your own car and have more wood than you can use. Without this large subsidy, Canada will no longer exist as an executable country. Strict but true! Therefore, Canada should be our important 51st state. The much lower tax and the military protection against Canadian people -there is no tariff!
He further, “The United States has a large deficit in Canada, Mexico, and China (and almost all countries!), And $ 36 trillion. We are no longer a” stupid country. ” If you make a product in the United States, there is no tariff! “
These are not complaints about Canada or Mexican drug policy. Rather, they are discussions to blast the North American trade system to lead the United States to operate a trade deficit with Canada and Mexico. In other words, the United States “subsidies” those countries.
This is a terrible economic analysis. The fact that the United States is purchasing more products from Canada than the opposite means that we are subsidizing that country. We purchase more products than buying from a grocery store. In that sense, you run a “trade deficit” with a grocery store. However, when you deliver a currency in exchange for a shopping cart full of food, it does not mean that you have just donated a charity to a clogger.
Nevertheless, Trump is much more dissatisfied with the fundamental unwantedness of trade with Canada, rather than the alias of the country expected to stop Fentanyl exports.
Apart from that, on Monday, he repeatedly want to use tariffs to force Canada to accept the annexation of the United States.
It's enough to say, “Canada is not the 51st state yet.” Probably, it is not qualified as a state emergency that legally justifies extraordinary economic measures from the president. For this reason, the Trump administration is likely to face legal orders to minimize the ambitions behind the President's tariff policy.
The second reason that Trump thinks that he will stick to his gun with tariffs is that he has been discussing trade for almost 40 years.
“Many people are tired of seeing other countries tearing the United States,” said Trump in 1987 about the US trade deficit. They laugh at us for our own foolishness. “
Trump did not have the motivation at that time play Believe that trade is a zero -sum exchange -there is a winner running on the surplus, and it is the loser who has a deficit. The man was still a real estate mogul at the time, not an official of the federal government, so his remarks would not have been intended as a mere diplomacy.
Finally, Trump's decision to keep his tariff relatively modest during his first term may be more about his own plagmatism.
In 2017, Trump was reportedly approaching the North American free trade agreement (NAFTA) to suddenly withdraw the United States. He needed a coordinated lobby activity in his cabinet to maintain his hand (presenting him a map that suggests that Trump's voters will be injured due to the collapse of trade between Canada and Mexico. A achievement achieved only by). Trump eventually negotiated NAFTA, retired, and dubbed his new version of the United States, Mexico Canada (USMCA).
In fact, Trump tried to pursue a variety of extreme and impulsive policies, with the withdrawal of the United States from NATO and bombing Iranian nuclear facilities.
However, his adviser does not seem to check his urge this time. On the contrary, they promoted Trump's most handed ideas. For example, it is a policy aimed at fighting the wildfire in Los Angeles on the surface, such as releasing dammed water into California's Chingya, but in fact it has almost achieved it beyond the danger of homeless people. I didn't. Managers and Golden State Farmers depletate the water supply that needs to come in spring and summer.
Trump may give a chance to trade peace
Ultimately, he seems to be much more likely that Trump will defeat a complete hideaway with his 25 % tariff. A new 10 % tariff on China's import will be implemented on Tuesday, but the President plans to re -negotiate USMCA in 2026. Until this point, the latter was always given priority when Trump's peculiar urge was involved in his core interests and explicit conflicts of his corporate supporters.
However, the threat of Trump's ultimately deeply expensive protectionist policy cannot be completely rejected. He has many truly misunderstood concepts about economic reality, and there are fewer political incentives to put plagmatism above the ideology beliefs.
