Donald Trump is not always a man of his word, but he was this weekend. He said that tariffs against Canada, Mexico and China were coming on Saturday, and so they did.
Keeping in mind that you can never quite be sure you're getting accurate details from this administration, here is the announcement in Trump's own words, as posted to his unpopular social media platform:
Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl. We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it.
Thus far, the White House has made clear that the Canadian tariffs will be collected starting on Tuesday (which means you have about 36 hours to stock up on maple syrup and ketchup chips). It is not clear when the tariffs on Mexico and China will be implemented. Canadian PM (for now) Justin Trudeau has already announced counter-tariffs equal to the ones imposed by Trump, with the possibility of an increase in the near future. Mexico's Claudia Sheinbaum and China's Xi Jinping have been less specific, thus far, but have promised that countermeasures are most certainly coming.
We wish we could say that we understand, or think we understand, what is going on here. But we don't. There is no doubt that Trump sees tariffs as a magic wand that solves many problems. There is similarly no doubt that he promised to hit Canada, Mexico and China with tariffs, and that he was going to follow through on that promise. Those things we know.
What we do not understand is what he is trying to achieve, and how he expects to achieve it. During his first term, he pulled this same maneuver, including the verbiage about immigrants. And the apparent point, back then, was to try and gain leverage over Canada and Mexico. The result was an updated version of NAFTA, the United States-Mexico-Canada Agreement (USMCA), which did not actually change very much. Still, it was enough for Trump to declare victory and drop the tariffs, conveniently forgetting the stuff about immigrants.
Maybe Trump is operating under the same game plan this time around. He is a man of very limited imagination, so it is certainly possible. However, while things are the same as in 2018, in some ways, there are also some pretty big differences. First, he's been a lot louder about the immigration bit this time, and has also added fentanyl to the mix. That will not be as easy to dismiss as it was the first time around. Second, the trade deal he was unhappy about last time was the work of the George H.W. Bush administration. The trade deal he's unhappy about now was the work of the Donald J. Trump administration. Is it really plausible he can do better this time than last time? Third, as the U.K. and France can tell you, appeasement can only go so far. Trudeau (and his replacement) and Sheinbaum will both be very well aware that this is the second time they've danced this dance, and there are still 4 years left in Trump's term. If they grant him a few concessions now, can they really believe he won't go to the trade war well again in a year or two? They may well decide that they need to hold the line now.
As to China, he hates China and the Chinese, and has no particular interest in working with the Xi administration. Last time around, Trump hit China with tariffs, and that was pretty much the end of the story. And since China does not share a continent with the U.S., and has many trade partners, not to mention a de facto dictator, that nation can adjust much more easily to a trade war than the U.S. can.
That brings us to the one other thing we are certain about: These newly launched trade wars, if they are allowed to linger for anything much longer than the 24 hours that the Colombia trade war lasted, are going to hit Americans in the wallet. After the last round of tariff-ing, analysis after analysis (like, say, this one or this one) made clear that Trump's policies ended up as a de facto, back-door tax increase on the middle- and working-classes. In fact, the biggest tax increase of the last 30 years.
And maybe that's the actual goal here. Trump wants to give a tax break to rich people, and one way to balance that out is to increase taxes on non-rich people. Perhaps, by framing this as some sort of American pride/keep out the brown people/fight the opioid epidemic thing, he believes that he can fool the base into believing that he is doing their bidding, while he is at the same time busy reaching into their pockets. If so, then it's also worth remembering that voters know when it's become harder to make ends meet, regardless of the reason why. The Republicans took a thrashing in the 2018 midterms, most obviously losing a net of 41 House seats to the Democrats. And study after study (like, say, this one and this one) has indicated that the trade wars of Trump v1.0 were a big part of the reason for that. So, whatever Trump's game is, he's playing with fire. (Z)