US trade partners warn Trump tariffs would harm all parties
· CNA · JoinTrading partners Mexico, Canada and China are warning US President-elect Donald Trump that his threat of imposing hefty tariffs on goods would harm the economies of all involved and would risk aggravating inflation.
Trump made a surprise announcement on Monday (Nov 25) for a 25 per cent tariff on imports from Canada and Mexico, as well as an additional 10 per cent levy on Chinese goods until they clamped down on drugs like fentanyl and migrants crossing the border,
Mexican President Claudia Sheinbaum on Tuesday said imposing tariffs would cause inflation and job losses… and suggested possible retaliation.
In a letter to Trump, she said: "To one tariff will come another and so on, until we put our common businesses at risk.”
The United States is by far the dominant destination for vehicles made in Mexico, with up to 79 per cent of them heading north across the border, while Canada is America’s biggest supplier of crude oil.
Canadian Prime Minister Justin Trudeau said he had a “good” call with Trump on Monday night.
“This is a relationship that we know takes a certain amount of working on, and that's what we'll do. One of the really important things is that we be all pulling together on this - the Team Canada approach is what works.”
Meanwhile a spokesperson for China's embassy in Washington said (quote): "No one will win a trade war or a tariff war."
Tariffs are paid by the companies that import goods, even though Trump frequently and incorrectly says that tariffs would hit foreign nations instead.
But chief economist Steven Ricchiuto from Mizuho Securities USA, speaking to Reuters, says it would still cause a ripple effect - especially in Canada and Mexico.
"Well, I mean, it's very, very clear that every country that has substantial manufacturing on each side of the border would be affected. But you also have to understand, given the weakness in global economic activity, it's hard for these suppliers to try to ... it's hard for these suppliers to not absorb some of the cost of the tariffs."
Tariffs could violate the USMCA agreement, a trade deal Canada, Mexico and the US signed in 2020 during Trump's first administration.
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