Customs duties: Trump launches offensive against China, Canada and Mexico

Donald Trump confirmed on Monday that his first economic measures after his inauguration in January will be to increase customs duties on products coming from China but also from Canada and Mexico, decisions that he justifies by the crises linked to opiates and immigration.

“On January 20th, as one of my many first executive orders, I will sign all necessary paperwork to impose a 25% tariff on Mexico and Canada on ALL products entering the United States,” the president-elect wrote in a post on his Truth Social network.

“This tax will remain in place until drugs, especially fentanyl, and all illegal immigrants stop invading our country!” he added.

In a separate post, he announced a 10% tariff increase, on top of existing tariffs and additional tariffs he may decide to impose, on “all the many products coming into the United States from China.”

He explained that he had often raised the issue of the influx of drugs, particularly fentanyl, one of the main causes of the opioid crisis in the United States, with Chinese leaders who promised to punish “traffickers” severely, “up to the death penalty.” “But they never got to the bottom of it.”

National security reasons can be used 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.

Shipping containers and gantry cranes at a port in Lianyungang, east China's Jiangsu province, on August 7, 2024 © AFP – STR

The increase in customs duties, which he often described as his “favorite expression” during his campaign, 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 trade practices that he considered unfair, also accusing Beijing of theft of intellectual property.

China responded with customs duties that had harmful consequences for American farmers in particular.

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

“No one will win a trade war,” warned Chinese diplomacy on Tuesday following the statements of the American president-elect. “China believes that trade and economic cooperation between China and the United States is mutually beneficial in nature,” stressed a spokesperson, Liu Pengyu.

– Warning –

In the evening, the government of Justin Trudeau considered that the relationship between the two countries was “balanced and mutually beneficial, especially for American workers.”

Before recalling as a warning that Canada was “essential for the energy supply” of the United States.

Canadian Prime Minister Justin Trudeau, October 14, 2024 in Ottawa © AFP – Dave Chan

In the country, where 75% of exports go to the United States, the news sent shockwaves. Quebec Premier François Legault said the announcement represented “an enormous risk” for the Canadian economy. His counterpart from British Columbia, David Eby, said that “Ottawa must respond firmly.”

Mexico “has no cause for concern,” President Claudia Sheinbaum tried to reassure the day after the American election.

The three countries have been linked for thirty years by a free trade agreement, renegotiated under pressure from Donald Trump during his first term.

The ability of the two neighbors of the United States “to ignore the threats of the president-elect is limited” as they depend on him, believes Wendy Cutler, vice-president of the Asia Society Policy Institute, an American think tank.

But analyst William Reinsch points out that their agreement was due to be renegotiated in 2026 anyway: “it's a classic Trump move, threaten and then negotiate.”

Last week's appointment to the post of Secretary of State for Trade by Howard Lutnick, CEO of the investment bank Cantor Fitzgerald and a vocal critic of China, confirmed the president-elect's desire to try to force his trading partners to yield to better agreements and relocate production to the United States.

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

He also wants to reintroduce customs duties of 10 to 20% on all products entering the United States and the European Union has already said it is “ready to react” in the event of new trade tensions.

Economists warn of the inflationary potential of such an increase in tariffs. customs.

All rights reserved for reproduction and representation. © (2024) Agence France-Presse