On Saturday February 1st, 2025, President Donald Trump announced sweeping tariffs on imports of goods from China, Mexico, and Canada, with China being hit with 10% above current tariffs and Mexico and Canada being hit with 25% tariffs. Some experts warned that such moves by the US administration could see the start of a trade war that could reignite inflation and negatively impact global growth. The president of the NFTC (National Foreign Trade Council) said that this move “threatened to raise the cost of everything from avocado’s to automobiles” and he hoped a resolution between America, Canada, and Mexico, could be quickly found.
Donald Trump signed three executive orders imposing said tariffs with a starting date of Tuesday 4th February 2025. The announcement and subsequent executive orders made good on President Trump’s promises during the election campaign despite repeated warnings from renown economists and analysts who advised that a trade war with Mexico and Canada (USA’s top trade partners) would erode growth both globally and in the United States with the result being increased prices for both companies and consumers.
However, before Monday the 3rd of February ticked round President Trump had already dialled back his plans for tariffs to start on Tuesday 4th February 2025, having announced a month’s respite for Mexico. President Trump confirmed that during a telephone call with the President of Mexico Claudia Sheinbaum, she confirmed that she would send 10,000 troops to the border to help combat illegal immigration and the flow on fentanyl, which is a key Trump demand to avoid tariffs.
Similarly, on Monday 3rd February 2025, the Prime Minister of Canada Justin Trudeau announced that President Trump had abandoned the February 4th deadline for tariffs, and like Mexico had agreed to a one month delay providing he took tougher measures to combat drug trafficking and illegal migration across their shared border. The concessions President Trump received from Prime minister Trudeau is the appointment of a new Fentanyl Czar, listing cartels as terrorists and in a joint venture with the United States, create a new strike force that will combat money laundering, organised crime, and drug trafficking.
In the meantime, China’s response to President Trump’s imposition of tariffs, has been to introduce their own tariffs on a number of US goods and targeting a small number of US companies. On Tuesday 4th February 2025, China announced an imposition of a 15% levy (under USD5 Billion) on imports of US energy and a 10% levy on US oil and agricultural equipment. The Chinese government also targeted PVH Corp (owner of Tommy Hilfiger, Calvin Klein, Olga and True) and Illumina Inc (a gene sequencing company) putting them on a blacklist.
The Chinese government also imposed stricter controls on the exports of critical metals such as tungsten, used in defence, aviation, and electronic industries. Experts suggest that this is a muted response designed to avoid an all out trade war, but enough to show President Trump that China can hit America where it hurts. The American President wishes to speak to President Xi before their tariffs and export controls take effect on 10th February 2025, perhaps another reason why China held back on an all-out response.
Elsewhere, President Trump suggested that the eurozone (European Union) could be next in line for tariffs and could happen “pretty soon”. He went on to say that “they don’t take our farm products, they don’t take our cars, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products”. The European Union initially condemned President Trump for initiating tariffs and advised they will respond in kind if they become a target.
Conclusion
Throughout President Trump’s election campaign the slogan has been “America First”, “Tariffs”, he even said tariffs is his favourite word. Before Donald Trump became President and after he became President he trumpeted tariffs, tariffs, tariffs. We shall bring factories back to America, create more jobs, lower taxes for everyone are the words that have been put forth to the American people. However, is President Trump using tariffs as a diplomatic club to get his way in other areas such as with Mexico and Canada. We shall see what will happen with the United Kingdom and the European Union, but for those American voters waiting on tariffs, they could be sorely disappointed.
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