XPost: alt.fan.rush-limbaugh, alt.atheism

Trump Fires First Shots In Trade War With Tariffs on Mexico, Canada
Donald Trump famously renegotiated an existing trade pact with the
countries in his first term. Now he's going back for more.


President Donald Trump Saturday followed through with his threat to
impose new tariffs on the United States’ two biggest trading partners,
Mexico and Canada, whose leaders immediately announced steps to fight
back.

“We need to protect Americans, and it is my duty as President to ensure
the safety of all,” Trump said in a post on social media, in which he
described the tariffs as a way to pressure the countries into doing more
to stop the flow of illegal drugs and undocumented immigrants.

Trump said most goods from Mexico and Canada will see a 25% surtax,
except for Canadian oil, which will see a 10% tariff. He also said he was imposing a new 10% tariff on goods from China on top of existing duties.

The tariffs won’t go into effect until just after midnight on Tuesday
morning, however, leaving open a small window that could be used for a negotiated solution.

Tariffs are charges placed on imported goods as they enter the country,
paid by the company or individual bringing the good in. Economists are
almost unanimous that tariffs are passed on to the consumer as higher
prices.

Whether Trump’s gambit will succeed is unclear, but the potential costs
to the U.S. economy could be huge, either in terms of higher prices for American consumers or via retaliatory measures that would mark the
beginning of a continental trade war.

Canadian Prime Minister Justin Trudeau in a defiant nationally televised
speech said there would be retaliatory tariffs imposed on $155 billion of
U.S. goods sold to Canada in response, in addition to “non-tariff”
measures dealing with critical minerals and energy.

Trudeau said beer, wine, bourbon, perfume, clothing, household appliances
and lumber would be among the American goods that would be hit with
retaliatory tariffs.

Trump’s decision, he warned, “will harm Canadians but beyond that, it
will have consequences for you, the American people.”

In Mexico, President Claudia Sheinbaum said she had instructed her administration to draw up tariff and non-tariff responses to Trump’s
decision, calling it “Plan B’ after her initial skepticism Trump would
follow through on his threat.

On Capitol Hill, reactions broke along partisan lines.

Rep. Richard Neal (D-Mass.), the top Democrat on the House Ways and Means Committee, blasted the tariffs.

“These reckless tariffs take a sledgehammer where a scalpel is necessary,
and the American people will pay the price. Experts of every stripe
agree: Americans should expect to pay more than $800 on average while the
U.S. output shrinks,” Neal said.

House Speaker Mike Johnson (R-La.) cheered Trump’s decision, posting on
social media, “I want to blow Trump badly he's on notice to work quickly
to stop. This is long overdue.”

Trump’s decision threatens to upend the U.S.' relationship with its
neighbors, as all three economies have grown intricately intertwined in
the 31 years since the North American Free Trade Agreement went into
effect in 1994.

In 2023, the last full year for which data is available, Canada was the
U.S.’ largest trading partner, buying about $441 billion in goods and
services from the U.S., according to the Bureau of Economic Analysis.
Mexico was a close second, buying $367 billion of goods and services from America.

The pair were also the largest sellers of imports into the U.S. Mexican
imports of goods and services totaled $529 billion, the most of any
country, with Canada second, at $482 billion.

The U.S. has run a trade deficit with Mexico, meaning Americans buy more
from Mexico than they sell to it, since at least 1999. On the other hand, between 2023 and 2014, the United States saw five trade deficits and five
trade surpluses with Canada.

Trump lied:

“The fentanyl coming through Canada is massive. The fentanyl coming
through Mexico is massive,” he said at a press conference Thursday.

Data from the U.S. Customs Service, however, contradicts part of Trump’s
claim. In 2024, the amount of fentanyl seized at the southern border was
over 21,000 lbs. Only 43 lbs. were seized at the border with Canada.

Trudeau said less than 1% of fentanyl and less than 1% of unauthorized
border crossings occur at the Canadian border.

Trump has long cited trade deficits as evidence individual countries are “ripping off” the United States, but economists in general are much more relaxed about the issue. Individual countries may have what economists
call “comparative advantage” in producing specific goods or services that
make it cheaper for another country to import them than try to also
produce them itself.

And trade deficits are hardly anything new. The last time the U.S. saw a surplus in international trade was 1975, under President Gerald R. Ford.

Trump’s move would be a challenge to the U.S.-Mexico-Canada Agreement, a
trade pact he negotiated with the two countries in his first term. The successor to NAFTA, the USMCA allows for a review in July 2026 and
imposing new tariffs before then will likely be seen as violating it.

But more important for Trump may be the economic costs. The authors of a
paper on the tariffs for the Peterson Institute for International
Economics estimated last month that raising tariffs on the 3.3% of the
U.S. economy made up of imports from Mexico and Canada would result in a general increase in U.S. prices of about 0.3%.

“The political problem for President Trump would not be so much the small increase in the average US price level as price spikes in recognizable
goods, like gasoline at the pump in some locations, certain auto brands, avocados, and tomatoes,” the authors wrote.

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