"The Tariff Tussle: What's at Stake as Trump Unveils New Trade Restrictions

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The Tariff Tussle What's at Stake as Trump Unveils New Trade Restrictions

As President Donald Trump prepares to unveil fresh tariffs on major trading partners Canada, Mexico, and China, the global economy holds its breath in anticipation of the potential consequences. In this blog post, we'll delve into the details of these new trade restrictions and explore what's at stake for businesses, consumers, and the environment.

The Tariff Strategy

Trump has promised to impose 25% tariffs on immediate neighbors Canada and Mexico, citing their failure to stop illegal immigration and the flow of fentanyl across US borders. He'll also implement a 10% rate on imports from China, the world's second-biggest economy, accusing it of producing the drug.

The Risks

However, imposing sweeping tariffs on these three biggest US trading partners carries significant risks for Trump. Higher import costs would likely dampen consumer spending and business investment, according to EY chief economist Gregory Daco. This could lead to

Inflation rising by 0.7 percentage points in the first quarter this year with the tariffs, before gradually easing.
Rising trade policy uncertainty heightening financial market volatility and straining the private sector, despite the administration's pro-business rhetoric.

The Fallout

Critics argue that Trump's tariff plan would have far-reaching consequences, including

Tariffs hitting the auto industry hard, with US light vehicle imports from Canada and Mexico in 2024 representing 22% of all vehicles sold in the country. Automakers and suppliers produce components throughout the region, meaning tariffs will likely increase costs for vehicles.
Both Canada and Mexico have said they are prepared to respond if Trump acts on tariffs, raising the specter of an escalating conflict.

The Oil Factor

Hiking import taxes on crude oil from countries like Canada and Mexico could also bring huge implications for US energy prices, especially in the US Midwest, according to David Goldwyn and Joseph Webster of the Atlantic Council. This could lead to

Nearly 60% of US crude oil imports coming from Canada.
Canadian heavy oil being refined in the United States and regions dependent on it may lack a ready substitute.
Canadian producers would bear some impact of tariffs, but US refiners would also be hit with higher costs, said Tom Kloza of the Oil Price Information Service. This could bring gasoline price increases.

The Bottom Line

As Trump's tariff plan takes shape, businesses and consumers alike must prepare for the potential consequences. With trade policy uncertainty on the rise, it's more important than ever to stay informed and adapt to changing market conditions. By understanding the impact of tariffs on different industries and regions, we can better navigate this complex landscape and emerge stronger as a global economy.

Join the Conversation

We invite you to share your thoughts on the tariff tussle! What do you think about Trump's plans? How will these new trade restrictions affect your business or community? Share your insights in the comments below.

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Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.