(AFP) – President Donald Trump is due to unleash fresh tariffs Saturday on major US trading partners Canada, Mexico, and China, threatening upheaval across supply chains from energy to automobiles. Trump promises 25 percent tariffs on Canada and Mexico, pointing to what he said was their failure to halt illegal immigration and the flow of fentanyl across US borders. He also vows a 10 percent tariff on imports from China, the world’s second biggest economy, charging that it had a role in the synthetic opioid’s production.
Trump has repeatedly expressed his love for tariffs and has signaled that Saturday’s action could be the first volley in further trade conflicts to come. This week, the US president pledged to impose duties on the European Union. He has also promised tariffs on semiconductors, steel, aluminum, copper, pharmaceuticals, as well as oil and gas. Trump returned to his Mar-a-Lago estate in Florida for the weekend with no public events on his official schedule. He headed to the golf course Saturday morning.
Canadian public broadcaster CBC reported Saturday that Ottawa has been told to expect 25 percent across-the-board US tariffs, although energy imports would see a lower rate of 10 percent. These would take effect Tuesday, CBC added. Canadian Prime Minister Justin Trudeau is expected to hold a press conference around 6:00 pm (0000 GMT), two Canadian government sources told AFP.
– Growth concerns –
Imposing sweeping tariffs on three key US trading partners carries risks for Trump, who swept to victory in November’s election partly on the back of public dissatisfaction over costs of living. Higher import costs would likely “dampen consumer spending and business investment,” said EY chief economist Gregory Daco. He expects inflation would rise by 0.7 percentage points in the first quarter this year with the tariffs, before gradually easing.
“Rising trade policy uncertainty will heighten financial market volatility and strain the private sector, despite the administration’s pro-business rhetoric,” he said. Trump’s supporters have downplayed fears that tariff hikes would fuel inflation, with some suggesting his planned tax cuts and deregulation measures could boost growth instead. Democratic lawmakers criticized Trump’s plans, with Senate Minority Leader Chuck Schumer saying Friday: “I am concerned these new tariffs will further drive up costs for American consumers.”
Canada and Mexico are major suppliers of US agricultural products, with imports totaling tens of billions of dollars from each country per year. Tariffs would also hit the auto industry hard, with US light vehicle imports from Canada and Mexico in 2024 accounting for 22 percent of all vehicles sold in the country, according to S&P Global Mobility. The research group added that automakers and suppliers also produce components throughout the region, meaning tariffs will likely increase costs for vehicles.
– Ready to respond –
Canada and Mexico have said they are prepared if Trump goes through with his plan. Trudeau said Friday that Ottawa is ready with “a purposeful, forceful” response. Doug Ford, premier of Canada’s economic engine Ontario, warned Saturday that “the impact of these tariffs will be felt almost immediately,” predicting job losses and a slowdown in business. Canada should “hit back hard and hit back strong,” he said at a local election campaign stop.
Mexican President Claudia Sheinbaum previously said her government would await any announcement “with a cool head” and had plans for whatever Washington decides. White House Press Secretary Karoline Leavitt, however, on Friday dismissed concerns of a trade war. Hiking import taxes on crude oil from countries like Canada and Mexico could bring “huge implications for US energy prices, especially in the US Midwest,” noted David Goldwyn and Joseph Webster of the Atlantic Council. Trump said Friday he was mulling a lower tariff rate on oil.
“We think we’re going to bring it down to 10 percent,” he told reporters. Nearly 60 percent of US crude oil imports are from Canada, according to a Congressional Research Service report. Canadian heavy oil is 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.
– Aurelia END with Beiyi SEOW in Washington
© 2024 AFP
