Donald Trump has announced that he will impose steep tariffs on China, Mexico, and Canada on his first day back in the White House. He said these steps are necessary to get these countries to take more serious measures against illegal immigration and drug trafficking into the United States.
In a post on his Truth Social platform, Trump detailed his plans, stating that he would sign an executive order on January 20 imposing a 25% tariff on all imports from Mexico and Canada. Following one more post, Donald Trump attacked China for failing to act on promises to impose the death penalty on those trafficking fentanyl, a drug he claims is entering the U.S. in unprecedented amounts, mostly via Mexico. To take care of this problem, he announced plans to put an additional 10% tariff on all Chinese imports until the flow of drugs into the U.S. is stopped. Trump framed this as a necessary measure to combat the crisis and urged attention to the matter.
In response to Trump’s announcement of additional tariffs on Chinese goods, a spokesperson for the Chinese Embassy in Washington, Liu Pengyu, stated that economic cooperation between China and the U.S. is mutually beneficial, warning that “no one will win a trade war or a tariff war.” The Chinese spokesperson pointed to ongoing cooperation between the two nations’ counternarcotics authorities, citing resumed communication since the San Francisco Summit. China, the spokesperson said, has shared updates with the U.S. on its drug enforcement efforts and responded to U.S. requests for information, rejecting claims that China knowingly permits fentanyl-related exports.
According to Swati Dhingra, a member of the Bank of England’s monetary policy committee, any proposed 60% tariffs by Donald Trump on imports from China might have complex implications for the global economy by compressing global inflation, “because goods are cheaper for everybody else.”. Speaking at a London conference, Dhingra explained that Chinese exporters might react to such steep tariffs through price-cutting in alternative markets in their efforts to maintain the volumes of trade, an action which could make goods cheaper worldwide, including in the UK.
However, she qualified that the effect will be variable, pending the reaction of other countries. Should governments retaliate by imposing their own tariffs or protectionist moves, a trade war could spiral out of control, damaging the world economy. Higher inflation may be in store for the U.S. since American consumers bear the tariff cost; however, global prices of those kinds of goods may drop as Chinese exporters adjust to new trade barriers.
As Trump’s proposals spark debate, the implications of his aggressive trade policies remain uncertain. What is clear is that his return to office would bring a sharp shift in U.S. economic and foreign policy, with tariffs once again taking center stage.
