New York, Feb 1 China, Canada, and Mexico, the three biggest trading partners of the U.S., are bracing for tariff hikes threatened by President Donald Trump, who also warned of "short-term disruption".
Trump has said he would raise the tariffs on imports from Canada and Mexico by 25 per cent to strong-arm them to stop illegal migration to the US and the inflow of drugs, and on China by 10 per cent to end the export of the deadly Fentanyl drug and its components that find their way to the US.
Although Trump has asserted that the added cost would be absorbed by the exporters, he conceded on Friday, “There could be some temporary, short-term disruption, and people will understand that.”
“But the tariffs are going to make us very rich and very strong – and we’re going to treat other countries very fairly,” he added.
The impact of the higher tariffs would not be fully felt immediately and will take time to seep into the retail markets.
According to the US Trade Representative, China is the largest exporter to the US, sending in goods worth $536.3 billion, followed by Mexico ($454.8 billion), and Canada ($436.6 billion).
Trump’s threats of increased tariffs worked last week against Colombia forcing it to immediately change course and agree to take back illegal migrants sent back from the US, firming up his resolve to weaponise tariffs.
The US is a partner with its neighbours in the US -Mexico-Canada Agreement on trade, which replaced the North American Free Trade Agreement that Trump opposed.
Canadian officials met with US Border Cazar Tom Homan on Friday in a bid to stop the tariff hike.
Canada’s Prime Minister Justin Trudeau, domestically very unpopular and on his last legs in office, warned, "We're ready with a response -- a purposeful, forceful but reasonable, immediate response. It's not what we want, but if he moves forward, we will also act.”
"I won't sugarcoat it -- our nation could be facing difficult times in the coming days and weeks”, he added.
The US is the customer for 75 per cent of Canada’s exports.
While the Canadian retaliation has not been spelt out, Ontario’s Premier Doug Ford has said he would ban the sale of American alcohol in his province.
Petroleum and its products were the largest Canadian exports to the US amounting to $132 billion and any increase in their retail prices would be felt at the petrol pump by customers, who were promised by Trump that the inflation would be tamed.
Late Friday, the Brent crude futures for April rose by 0.7 per cent or 54 cents per barrel.
In the case of Mexico, customers could feel the pinch when buying vegetables and other agricultural products if the tariff hike is passed on to them.
Mexico’s President Claudia Sheinbaum said on Thursday, “We will always defend respect for our sovereignty and a dialogue as equals but without subordination.”
China’s Washington Embassy took a muted approach saying, “There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world.”
Tariffs on China would affect a vast swath of consumer goods, as well as high-tech.
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