In Wall Street, it is called Trump’s volatility, and the message of the past few days is that investors-and everyone-is better to get used to. At the weekend, the president achieved a promise to the signing campaign, and the imposition of twenty -five percent of Mexican and Canadian goods and ten percent on Chinese imports. On Monday, after Claudia Shinbom, the Mexican President said that she would send ten thousand soldiers to fight drug smuggling on the southern border, and the White House said it was suspended for a month. Later in the day, Trump spoke with Justin Trudeau, the outgoing Prime Minister in Canada, who pledged a similar, and came out with a similar pause.
Mexico and Canada are completely vulnerable to such pressure: the United States represents about eighty percent of its trade. On his part, Trump was under great pressure from the business world to retreat, and when the president stopped the customs tariff, the pro -commercial liberalization page of Wall Street Journal He ran with the title “Trump Run”. In the markets, news of definitions led to an early sale; The market recovered on the stop news. At the end of the trading, the S. & P. 500 index decreased less than one percent. On Tuesday, the markets did not move much.
Some investors still hope that Trump’s threat to sanctions will be just a negotiating tactic to impose privileges from commercial partners. Or, as Scott PesinThe former director of hedge financing, who is now the Minister of Treasury, He said Financial times In October, “it is rising to cancel the escalation.” maybe. But since its inception, Trump explained that he has been planning to raise the international trade system and confirm the American economic power in ways that are mainly contradicted with how the global economy has been organized since then after the Second World War – a period in which the American is enlarged – the average gross domestic product of the individual increases from about fifteen thousand Dollars to nearly seventy thousand dollars, while, in recent decades, workers ’wages are stagnant and inequality has increased sharply.
Trump carried a campaign to use the commercial policy to protect American workers, but his willingness to roam the neighbors of America, Mexico and Canada, as well as Greenland, Colombia and Panama, is part of a wider agenda described more accurately as economic imperialism than just protectionism. One of the definitions of economic imperialism is a strong country that uses its power to exercise control of economic resources and weakest policies. Trump’s excuse was martyred in definitions on Mexico and Canada was the flow of fentanel. This is definitely a serious problem, which was particularly proposed by Mexican drug gangs: last year, the authorities seized ninety -six hundred kilograms of medicine on the southern border. However, the total amount of fentanel seized on the northern border in 2024 was just nineteen kilograms, According to New York Times. Canada is not a major source of killing Americans killing fentanel, and it seems that the real cause of Trump’s sport towards the country is that he is running a commercial surplus with the United States and that its leader was not sure enough.
During the weekend, Trump actually claimed his social account, “We pay hundreds of billions of dollars to support Canada. Why? There is no reason.” And fifty. Of course, the United States does not spend a dollar to support Canada. As among many advanced economies, many trade continues across the borders of the United States and Canada. In 2023, Canada imported $ 440.9 billion of US goods and services. Certainly, we also imported many goods and services from Canada: $ 481.6 billion. This has created a bilateral trade deficit of $ 40.7 billion, equivalent to less than 0.15 percent of USGDP – a disturbing character.
Moreover, trade in goods and services is only part of the economic relationship in the United States and Canada. Financial capital is also transmitted across the northern border in search of profitable investment opportunities, such as buying companies or real estate. In 2022, according to the American Trade Representative Office, the total Canadian direct investment shares in the United States amounted to 589.3 billion dollars, compared to the American direct investment in Canada of $ 438.8 billion. In other words, the United States was running a surplus on investment capital. Trump may have benefited himself from this flow by selling apartments to the wealthy Canadians. If he had, he did not mention it.
As for the trade deficit, many of it will be calculated by energy products, especially crude oil and natural gas, which Canada exports to the United States in large quantities. If the definitions enter into force, the price of these products will rise to Americans. During the weekend, IRVing Energy, a Canadian company that supplies propane to Maine, New Hampsheer and Vermont, warned that it will transfer the fees to its customers. This is what happens in commercial wars.
The auto industry plays a major role in American trade with Mexico and Canada. Since the signing of the Free Trade Agreement in North America in 1993, American and foreign auto companies have reinstalled their manufacturing operations. General Motors, for example, is now about forty percent of the vehicles it sells in the United States in Mexico and Canada. The level of integration across the border exceeds the final assembly. A large part of the supply chain in the industry is organized on the basis of Continental, and some parts cross the border several times before shipping it as part of a car or truck. As Paul Crowgman Indicate In an alternative post, Trump’s tariff threatens to detonate this entire model.
And why? Trump’s speech sometimes indicates that his goal is to make the United States self -sufficient in almost everything; The last major capitalist economy to achieve such a goal was Nazi Germany. At other times, including during the weekend, it celebrated definitions as a source of revenue for the federal government, and suggested that it be better than income taxes. However, if the definitions will become a major source of revenue, they will have to be large and durable. What, then, from “an escalation to the abolition of manufacturing”?
It is certain that it is sufficient to know that Trump is the definitions as an effective tool for bullying in other countries, and that his recent experience with Colombia has strengthened this conviction. (After the Colombia government refused to accept military flights to migrants deported from the United States, Trump separated the severe definitions of the country, which led to a rapid reflection on the part of Colombia.)
On Sunday, Trump indicated that the next step is to announce the punitive definitions of goods from the European Union, which has long been one of Nuwair. The way things are going, it will not be surprising that he allocated Denmark, which exports a lot of medical products, including OzemPIC, for the United States, for special punitive therapy, as a way to pressure it to make concessions on the metal, which appears prominently in His imperial ambitions. (He has already received one phone call with the Danish Prime Minister, Mette Frederiksen. Financial times I mentioned He “has gone very badly.”)
So far, China has launched the main goal of the Trump’s first trade war, relatively slightly, with a 10 percent comprehensive tariff. (During the 2024 campaign, it threatened a tax of sixty percent.) On Tuesday, China announced reprisals about American exports of crude oil, natural gas, agricultural equipment, and some other vehicles. Since many major American companies, including Apple, Intel and Tesla, are still largely dependent on Chinese supply chains, the government in Beijing has the ability to cause more harm to the American economy, but its measured response indicates that it is open to negotiations And some of the business allies in Trump may advise him to exercise caution. Meanwhile, it is busy bullying on weakness and discovers to what extent can it take things without creating a financial accident. ♦
