Why It Matters:
Trump's trade war with Canada, Mexico, and China has significant implications for the global economy. The imposition of tariffs disrupts supply chains, increases costs for businesses, and raises consumer prices. The retaliatory measures from these countries further escalate tensions, potentially leading to economic slowdowns and increased inflation. The trade war also strains diplomatic relations and undermines international cooperation.
State of Play:
The move has provoked the reaction of the three countries and sparked significant debates about its implications for global trade relations and the economy.
• Canada has responded with 25% tariffs on $155 billion worth of U.S. goods.
• Mexico has announced countermeasures, including both tariff and non-tariff measures.
• China has filed a complaint with the World Trade Organization.
What They Are Saying:
Critics highlight the negative impacts of the tariff war on global trade, economic stability, and the well-being of industries and consumers.
- Wall Street Journal: "The dumbest trade war in history"
- Iranian Ex-Foreign Minister Javad Zarif: "Trump's tariffs are a clear example of economic terrorism, aimed at destabilizing global trade and harming nations that do not align with his policies."
- UK Home Secretary Yvette Cooper: "Tariff increases right across the world can have a really damaging impact on global growth and trade"
- Douglas A. Rediker from Brookings Institution: "Trump’s broader trade strategy reflects a worldview rooted in 19th-century mercantilism, emphasizing protectionism and an aggressive use of tariffs."
- Sam Ashworth-Hayes From The Telegraph: "[Trump's] Triggering a trade war with his allies won’t make America stronger"
Zoom in:
Still, there have been critical views from the EU with quotes suggesting a determination to fight back against the war.
- European Central Bank President Christine Lagarde: "The EU must be prepared for the imposition of U.S. tariffs under Trump".
- Senior European Diplomat: "We will hit back fast and we will hit back hard".
- European Commission: "Brussels has a list that is ready, and they are pretty confident that they can win this trade war".
Between the Lines:
Donald Trump recently threatened BRICS nations with 100% tariffs on their exports to the U.S., in response to their plan for creating their own currency instead of the U.S. dollar. Trump even extended the scope of his threat, stating that any country attempting to create or back a new BRICS currency would face severe tariffs.
The Bottom Line:
Given the tariff tit-for-tat, if oil is not left out of the tariffs, its price will soar and consequently would lead to gas price hikes, a super-crisis looming large to the American people.
Go Deeper:
Trump puts tariffs on Canada, Mexico and China, sparking trade war
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