Facebook
X
LinkdIn
Copy Link
No one can act surprised if Donald Trump pushes ahead with substantial tariffs on Canada and Mexico tomorrow. “Tariff” is the President’s favorite word, as he said many times on the campaign trail in the lead up to last November’s US election. The only words that could compete for the top slot were “love” and “religion.” So, the countdown to February 1 — when a staggering 25 percent border tax is slapped on the countries north and south of America’s border — isn’t, in theory, some dreaded doomsday for Trump. If anything, it’s more like the countdown to Christmas.
But is this really the end game for the President, who has promised the American people both tariffs and cheaper goods at the same time? Before the election, those close to Team Trump were always in a hurry to say that tariffs are negotiating tactics: a threat that, in the best-case scenario, can lead to changes that allow for even more trade.
This follows on from the President’s thinking in his first term, when tariffs were used (less frequently than he originally suggested) to get countries to change the terms of trade agreements or up their defence spending. They were not really used in the way that Trump’s now-Vice President J.D. Vance makes the case: to protect American industry from fierce competition, which allows them to charge consumers more than they otherwise could.
It’s also no surprise, then, that the Wall Street Journal reports this morning that White House officials are trying to find the “off-ramps” to make tomorrow’s tariff announcement a little less extreme. This could include selective taxes on certain goods, which avoid products that would see costs quickly spike for American consumers (or leave America reliant on far less friendly providers, which would explain any decision to exclude oil from the 25 percent hit).
If these tariffs are imposed, the game of chicken begins. Trump is counting on these countries to make concessions under the weight of his tariffs, prioritizing access to the US market over almost any other calculation. But for how long will Trump be able to keep these tariffs in place without Americans noticing that prices are drifting up? Having won the election, in large part, due to the cost-of-living crisis (and pinning inflation on the Biden Administration), any secondary round of price hikes — even much smaller ones — is not going to be warmly welcomed by the American people. Trump supporters could be the most critical.
Tomorrow is, of course, a self-imposed deadline, which was supposed to encourage both Canada and Mexico to crack down on illegal immigration and drug gangs importing fentanyl. China may be facing some announcements too, as Trump continues to talk about an additional ten per cent tax on imports until China makes some major changes to how it does business. This means the President has some flexibility, though he’ll need to implement some kind of border tax simply to prove that he follows through on his proclamations.
It’s this kind of hard-ball tactic that Trump will, quite rightly, credit for the Israel-Hamas ceasefire and release of hostages that took place the weekend before his inauguration. And the President clearly thinks it’s a winning tactic to achieve all sorts. But what is formally announced in the coming hours will tell us plenty about just how confident Trump is that he can still change the hearts, minds, and policies of other countries. The harder he goes on tariffs, the more confident he is that he’ll win the trade battle. It’s quite the gamble, but the kind of gamble the 47th President likes to take.
Leave a Reply