With President Trump’s arrival in office, on February 1, 2024, an imposition on new tariffs was announced on imports from Canada, Mexico and China. The tariffs become effective February 4 and include a 25% tax on nearly all goods imported from the previously named countries. Canadian energy resources face a 10% fee and imports from China are potentially able to reach an additional 10% fee. These tariffs were imposed as a result of issues like illegal immigration and drugs.
The impact of these tariffs have a significant potential impact on the economy. Analysis From The Peterson Institute for International Economics is predicting a 1.5% decline in the U.S. economic output in 2024 and an additional 2.1% in 2026. This is a pretty big problem as industries in America have always relied on cross border supply chains such as the U.S. auto sector, this causes higher costs and potential disruptions. In response to these tariffs countries have had retaliation plans in effect such as Canada’s response to these tariffs was to impose their 25% tariff on the U.S. Mexico plans to do similar actions.
After the tariffs imposing announcements, the Canadian Prime Minister, Justin Trudeau called the tariffs a severe blow to trade relations while the President of Mexico labeled the tariffs flagrant violation of the USMCA trade agreement and explained why the tariffs are unfair. Even a survey conducted by the U.S. Chamber of Commerce shows these tariffs had led to many businesses stockpiling goods and reconsidering their supply chains.
The U.S. administration says that the imposed tariffs are necessary for our national security and the protection of the economy but many have voiced that these tariffs can harm consumers and businesses in America. Tariffs only solve short term, while potentially having long term problems. As trade relationships with other countries that are key for imports have strained, with other countries having retaliation methods, the long term effects these tariffs could have on the economy seem to be a vast issue for consumers and are unsure of the state of the economy.
