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:<br><br>"The World Awaits Trump's Tariff Deadline: What's at Stake
:<br><br>"The World Awaits Trump's Tariff Deadline: What's at Stake
**The World Awaits Trump's Tariff Deadline: What's at Stake**
As President Donald Trump approaches his deadline to impose tariffs on Canada, Mexico, and China, the global economy is bracing for impact. With less than 24 hours remaining, the stakes are high, and the world waits with bated breath to see what actions will be taken.
**Background**
In February, Trump announced plans to introduce 25% tariffs on Canada and Mexico if they failed to address issues related to illegal migrants crossing the US border and the flow of deadly fentanyl. He also threatened a 10% duty on Chinese goods for similar reasons.
**The Stakes**
The potential impact of these tariffs is significant. JPMorgan analysts believe that the tariffs are a bargaining chip to accelerate the renegotiation of a trade deal between the United States, Mexico, and Canada. However, potentially dismantling a decades-long free-trade area could be a significant shock.
**Canada and Mexico**
For Canada and Mexico, the stakes are particularly high. According to JPMorgan analysts, these countries would suffer the most under 25% US tariffs and proportional retaliations from both countries. "Canada and Mexico stand to lose 3.6 percent and two percent of real GDP respectively, while the US would suffer a 0.3 percent real GDP loss," said Wendong Zhang, an assistant professor at Cornell University.
**Recession Risk**
The potential for recession is also a concern. Blanket US tariffs and Ottawa's response in kind could cause Canada to fall into a recession this year, Tony Stillo of Oxford Economics told Agence France-Presse. The United States also risks a shallow downturn.
**Exceptions?**
It remains unclear if there could be exceptions, with Trump saying he expected to decide Thursday whether to include crude oil imports in tariffs on Canada and Mexico. This is particularly significant given that Canada and Mexico supplied more than 70% of US crude oil imports, with almost 60% of such US imports from Canada alone.
**Tariffs and Crude Oil**
The potential impact on the energy sector is also a concern. Stillo noted that heavy oil is "exported by Canada, refined in the US, and there aren't easy substitutes for that in the US."
**Industrial Buyers and Consumers**
A tariff hike would shock both industrial buyers and consumers, cutting across everything from machinery to fruits, according to the Peterson Institute for International Economics (PIIE).
**Financial Support**
Canadian officials have said Ottawa would provide pandemic-level financial support to workers and businesses if US tariffs hit. Prime Minister Justin Trudeau added Wednesday that Ottawa was working to prevent the levies and stood ready to issue a strong response.
**China**
Meanwhile, Trump still eyes fresh tariffs on Chinese goods too, saying Thursday he was mulling them. White House spokeswoman Karoline Leavitt told reporters this week: "The president has said that he is very much still considering that for February 1st."
**Beijing's Response**
Beijing has vowed to defend its "national interests," and a foreign ministry spokeswoman previously warned that "there are no winners in a trade war." On the election campaign trail, Trump raised the idea of levies of 60% or higher on Chinese imports.
**The Future?**
Isaac Boltansky of financial services firm BTIG expects to see "incremental tariff increases" on Chinese goods, with consumer goods likely to face lower hikes. "Our sense is that Trump will vacillate between carrots and sticks with China, with the ultimate goal being some sort of grand bargain before the end of his term," he said in a recent note.
As the world waits to see what actions will be taken, one thing is clear: the stakes are high, and the future of global trade hangs in the balance.
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