Donald Trump announces increase in customs duties on products from China, Canada and Mexico

Donald Trump confirmed, Monday, November 25, that his first economic measures after his inauguration in January would be to increase customs duties on products coming from China, but also from Canada and Mexico. These three countries are the largest trading partners of the United States. The president-elect justified these decisions by the opioid and immigration crises.

“On January 20, as one of my many first executive orders, I will sign all necessary documents to impose 25% tariffs on ALL products entering the United States on Mexico and Canada.”wrote the president-elect in a publication on his Truth Social network. “This tax will remain in effect until drugs, especially fentanyl, and all illegal immigrants stop this invasion of our country!” »he adds.

Mexico, Canada and the United States are linked by a free trade agreement, CUSMA, which replaced NAFTA under Donald Trump's first term. In response, Canada recalled Monday evening that it was “essential for energy supply” of the United States. “Our relationship is balanced and mutually beneficial, especially for American workers”added the Deputy Prime Minister of Canada, Chrystia Freeland in a press release.

In a separate post, Donald Trump announces an increase in customs taxes of 10%, which is added to those already existing and to those additional that he could decide, on “all the many products arriving from China to the United States”.

Trade wars initiated during his first mandate

He explains that he has often raised the problem of the influx of drugs, notably fentanyl, one of the main culprits of the opioid crisis in the United States, with Chinese officials who promised him severe punishment, “until the death penalty”THE “traffickers”. “But they never got to the end of things”he regrets.

National security reasons can be invoked to deviate from the rules set by the World Trade Organization (WTO) but countries generally refrain from using this exception as a regular tool of trade policy.

The increase in customs duties is one of the keys to the future economic policy of the president-elect, who is not afraid to relaunch the trade wars, particularly with China, started during his first term.

At the time, he justified this policy by the trade deficit between the two countries and Chinese commercial practices that he considered unfair, also accusing Beijing of theft of intellectual property. China responded with customs duties with harmful consequences for American farmers in particular.

Joe Biden's administration had maintained certain customs duties on Chinese products and had imposed new ones targeting certain products.

An inflationary risk

Last week's appointment as Commerce Secretary of Howard Lutnick, CEO of the investment bank Cantor Fitzgerald and a keen critic of China, confirmed Donald Trump's desire to try to bend his trading partners to obtain better agreements and relocate production to the United States.

Economists warn of the inflationary potential of such an increase in customs duties. The American Action Forum estimates that inflation would move away from 2% initially, before prices stabilize again, albeit at a higher level. These measures could also have a negative impact on employment, according to experts.

Concerning China, Donald Trump has promised customs duties of up to 60% for certain products, or even 200% on vehicle imports from Mexico.

American laws give the president the necessary tools to implement customs duties by decree, as Donald Trump was able to do several times during his first term, on steel and aluminum, both Chinese and European, for example. .