President Trump made one of the largest gambling of his presidency on Tuesday by starting a overwhelming customs tariff without any clear justifications for imports from Canada, Mexico and China, which led to a trade war risking undermining the US economy.
His actions increased diplomatic relations with the largest commercial partners in America, sent markets, and provoked revenge on American products – leaving companies, investors and economists with confusion why Mr. Trump created such turmoil without extensive negotiations or clear thinking.
Mr. Trump presented a variety of interpretations of definitions, saying that it is a punishment for the failure of other countries to prevent drugs and migrants from flowing to the United States, a way to force manufacturing to America and revenge for countries that benefit from the United States. On Tuesday, he referred to Canada’s hostility towards American banks as another reason.
Canadian Prime Minister Justin Trudeau said it was difficult to understand the logical basis of Mr. Trump for definitions, but he assumed that his intention was Shell Canada. “What he wants is to see a complete collapse of the Canadian economy, because this will be implicit,” Mr. Trudeau said during a press conference on Tuesday. “This will never happen. We will not be the 51st country.”
Howard, Minister of Commerce, on Tuesday afternoon, said the president may reach a kind of residence with Canada and Mexico and announced on Wednesday. “I think he will discover, you are doing more, and I will meet you in the middle,” said Mr. Lootnick.
Canada has announced a series of retaliatory tariffs at $ 30 billion US imports, and Mr. Trudeau said that other “non -fire” measures were coming.
“Yes, he can damage the Canadian economy, but it will discover quickly, because American families will discover quickly, they will harm people on both sides of the border,” said Mr. Trudeau.
Stock markets have declined all over the world. In the United States, the financial sector was the worst, along with a group of companies, including cruise lines and large technology companies. S&P 500 decreased by 2 percent before moderate losses in the afternoon. The decrease added to a loss of 1.8 percent on Monday, which was the most severe decrease this year.
The bet that Mr. Trump seems to make is that America is very strong economically and decisive to international trade to the point that he can spread definitions as Cudgel to solve almost every problem. But the Mercantilism mixture and bullying risk destabilizing the American economy, which has been beaten for three years of inflation and is now facing slowing down.
The president imposes a highly imported import tax on the largest commercial partners in America at a moment when inflation was not suffering from full control, a decision that many economists say that will increase the costs of American families and hinder economic growth.
“The American people rely on President Trump to reduce costs and develop the American economy,” said Michael Hanson, Executive Vice President of Public Affairs of the Retailing Industry Association. “The definitions of Canada and Mexico are exposed to a serious danger and risk of shaking the stability of the North America’s economy.”
Anxious business groups were holding emergency meetings on Tuesday to determine their responses to commercial moves, which impose a 25 percent tariff to Canada and Mexico products, and to add another 10 percent tariff to the previous fees on China. Some groups were considering taking legal measures to challenge the National Security Authority that the Trump administration calls for the age of definitions.
Others were trying to deal with what he would mean to the lower lines. The goal of the retail seller on Tuesday warned that the customs tariff could harm its efforts to recover from the difficult year 2024, saying that consumers can Retreat Amid the broader uncertainty about the economy and that the company can raise the prices of some products early this week. Best Buy CEO, Corie Barry, said at a phone conference that the price increase was “very possible”, but it was difficult to determine its size.
Cathy Posteangic, the chief economist throughout the country, estimated that if the definitions are preserved and revenge continues, economic growth will be less below a percentage point than it was. This indicates that the American economy will only grow 1 percent in 2025. In 2024, it grew by 2.5 percent.
Mrs. Bostjancic has also estimated that the customs tariff can lead to an increase in high prices on the daily elements that would cost families an additional $ 1,000 per year, on average.
Some companies and unions that will benefit from the definitions have praised. “They are happy to see an American president taking an aggressive action regarding the end of the free trade disaster that decreased like the bomb on the working class,” said united union.
Mr. Trump did not show any signs of retreat on Tuesday, saying that companies can simply avoid tariffs if they built their factories in the United States.
“If companies move to the United States, there is no tariff !!!” Mr. Trump wrote the social fact on Tuesday.
Hours later, Mr. Trump warned that if Canada decreases with its higher definitions, the United States will increase its “mutual” tariff with the same amount.
The best assistants of Mr. Trump Economists tried to explain the decision on Tuesday. Mr. Lutnick said on CNBC that the definitions were “not a trade war”, describing the conflict as a “drug war” instead.
The Minister of Commerce said that if Canada and Mexico were able to prove that they can stop the flow of fentanel, “of course the president can remove these definitions.” But he said that the United States did not see a “statistical reduction in deaths in America.”
Official statistics indicate It decreased dramatically Over the course of the 12 months ending in September, expressions on the borders of the United States and Mexico Decline.
Mr. Lootnik said the president would take other trade -related measures against Canada and Mexico in April. “Canada and Mexico had a call to deliberate with an amazing economy, the United States of America, and they have offended the use of this invitation,” said Mr. Lootnick.
Evert Essenstat, a partner in Squire Patton Boggs and a former economic advisor to Mr. Trump, said the president seemed not satisfied with the progress of other countries in fighting drug trafficking, but he said he might have other goals.
“I think it’s a matter of fentanel, but it is also broader,” he said.
Mr. Trudeau, alongside President Claudia Xinbum from Mexico, implicitly that the administration was creating a wrong pretext for the tariff.
After the recent list of successes achieved by Mexico in taking commercial measures on drug smuggling, Mrs. Shinbaum rejected what he called the “Fintanel argument” that Mr. Trump called to justify the imposition of a tariff.
“For humanitarian reasons, we are cooperating to prevent illegal drug trafficking in the United States,” she said in a statement. “However, as we mentioned on many occasions, the government of that country must also take responsibility for the opioid crisis that caused many deaths in the United States.”
Mr. Trudo called Mr. Trump’s logical basis “completely false, completely unjustified, completely liar.”
One of the main goals of Mr. Trump for definitions is to force more local manufacturing. The trade deficit is also seen as American “subsidies” for other countries and it is believed that the customs tariff can help compensate for the cost of tax cuts and helps to pay the 36 trillion dollars.
Customs tariffs are likely to encourage some companies to open factories in the United States to serve American customers. But Canada, Mexico and China have also announced plans to take revenge on American exports, as they struck a wide range of American sectors, including agriculture, retail and cars.
The economic impact of definitions depends on how global trade transformations to explain the increasing costs and how consumer adaptation. Quoting the transfer of trade to Vietnam and Mexico during the trade war of Mr. Trump in his first administration, economists in the macroeconomic economy expect that these definitions will lead to a decrease in the share of American imports from Mexico to 13 percent, a decrease of 2 percentage points. They also expect US imports from Canada to a decrease to 10 percent.
John C Williams, President of the Federal Reserve in New York, warned on Tuesday that the tariff is likely to lead to the high prices of the United States, but the size was uncertain.
Speaking at an event hosted by Bloomberg, he said that he began to be treated in the impact of definitions on inflation, “because I think we will see some of these effects later this year.”
Mr. Williams confirmed that the Federal Reserve was closely attention to how the definitions affect economic activity, including if companies continue to invest or if consumers continued to spend. “This is where I think the uncertainty is great,” he said.
Mr. Trump is likely to be right in his account that the customs tariff will harm trade partners in America more than the United States. Since the United States is a large country with a variety of resources, it is less dependent on trade than many other advanced economies. The customs tariff can also enhance the US dollar, which is the reserve currency in the world, making imports appear cheaper and effective some of the fees.
Trade in goods and services is about a quarter of American economic activity, compared to about 70 percent for Mexico, Canada and 37 percent for China. Kinda and Mexico send about 80 percent of their exports to the United States, which makes them relied heavily on the United States.
The reaction of foreign governments was already to threatening Mr. Trump’s tariff by working quietly to diversify their trade relations, and to search for partners other than the United States. Mexico has it Update the Trade Agreement With the European Union and pushed forward in commercial talks with Brazil. Europe has reached a separate agreement with South American countries and Switzerland.
However, the negative effects of definitions are likely to be unwanted, especially for Canada and Mexico. and Analysis by the Peterson Institute for International Economy In February, it was found that the customs tariffs by 25 percent on all American imports from Canada and Mexico, which are compatible with a similar tariff from those countries, will lead to the shrinking of the American economy in the coming years, although Canadian and Mexican economies will imitate more.
Definitions were based on a rapid condemnation of the Democrats in Congress while the Republicans were tired of defending them.
The majority leader of the Senate John Thun, Republican in South Dakota, said that the tariff of Mr. Trump was “directed towards specific goals, in this case, to reduce the amount of fentanel in this country, through our borders. Thus I think these definitions are temporary.”
“We hope, when everything is said and done, it will not be something that will create a lot of disorder,” he said.
Senator Ted Cruz, the Republican in Texas, said he hoped that customs duties will not last for a long period of time.
Mr. Cruz said: “Texas is a huge amount of trade with both Mexico and Canada,” said Mr. Cruz. “So, I hope these definitions are the incentive that President Trump said they are designer to be.”
Colbey SmithJoe Renison and Katie Edmondson contributed to the reports.
