US tariffs on Canada and Mexico will happen on Tuesday, says commerce chief
The US is to impose tariffs against Canada and Mexico on Tuesday, 4 March, but the level has yet to be decided. US commerce secretary Howard Lutnick said on Sunday that the tariffs will go ahead as planned but the exact details will depend on the outcome of negotiations.
Last month Trump agreed to delay plans to impose a 25 per cent tariff on all Canadian and Mexican imports for a month after winning concessions on border security.
A 10 per cent tariff on Chinese imports is also expected to be implemented in response to US accusations that Beijing is not doing enough to stop the flow of fentanyl into the US.
Analysis from a US thinktank suggests that American consumers could pay an average of US$1,200 more per year as a result of Trump’s planned tariffs.
The Peterson Institute for International Economics found that the tariffs would prompt retaliation from foreign governments, harming economic growth and leading to higher import costs that would be passed on to American households.
“These announcements mark the first wave of tariffs expected to come from the new Trump administration,” the institute said. “Trump has threatened the entire world with tariffs. Further, governments abroad will retaliate; both Canada and Mexico have already announced retaliatory measures.
“Future waves of US tariffs and retaliation will increase these substantial consumer costs alongside the other economic harms of tariffs: reduced economic growth, a shrinking export sector, and supply chain disruption.”
“While exchange rate movements or declines in exporter prices could reduce consumer harm, prior evidence is clear that exchange rate effects have only a partial dampening effect (with any alleviation coming at the expense of the export sector).
“Careful analysis of the 2018/19 trade war with China consistently found that foreign exporters to the US did not lower prices when hit with US tariffs; US buyers of imports bore the tax burden.”
