Last month, President-elect Donald Trump declared that he would impose a 25 percent tariff on all Canadian and Mexican imports on his first day in office, drawing immediate warnings from the leaders of those nations.
Trump argues that tariffs would goad our neighbors to control the flow of undocumented immigrants and drugs into the United States. He also promised a 10 percent tariff on Chinese imports, on top of the levies he imposed during his first term and that President Joe Biden maintained.
China also manufactures ingredients used by drug cartels to make fentanyl. Alternatively, Trump advisors suggest he might declare an economic emergency to justify tariffs, which could trigger a prolonged court challenge. But some analysts say he might seek Congressional approval for tariffs as part of a larger tax bill in , when tax cuts passed in his first term are set to expire.
However, the latest Trump plan would escalate the trade war. Such aggressive policies are a bad idea, as they would increase consumer costs, spike inflation, raise interest rates, kill jobs, and reduce economic growth as measured in GDP [gross domestic product]. Williams: There is a tradeoff. Over decades, Mexico has a poor track record in drug interdiction and keeping harmful substances from flowing north to the United States.
China has also been implicated in supplying ingredients of fentanyl. However, in doing so, if Trump follows through on the large tariff hikes, trade between Mexico and China would decline, and US consumers would be stuck paying higher prices at places such as grocery stores, gas pumps, and car dealerships. Tariffs increase the cost of imported goods, temporarily protecting domestic markets, and they can raise incentives for onshore manufacturing and sales.
