President Donald Trump said Sunday that while there may be “some pain,” the “results will be spectacular,” one day after signing executive orders imposing tariffs on Canada, Mexico, and China in response to the fentanyl crisis.
Trump’s orders will impose 25% tariffs on goods imported from Mexico and Canada, and 10% on Chinese goods. Canada’s energy exports to the United States face a 10% tariff instead.
In all caps he posted on Truth Social on Sunday morning: “THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID. WE ARE A COUNTRY THAT IS NOW BEING RUN WITH COMMON SENSE – AND THE RESULTS WILL BE SPECTACULAR!!!”
If Trump’s tariffs are imposed, the National Retail Federation estimates that each U.S. household will face an additional $7,600 in annual costs. They include the cost of automobiles, building materials, home furnishings, distilled spirits, fresh food, and energy.
According to Mexico’s National Auto Parts Industry Association, tariffs affecting Canada and Mexico will cause the average price of a car to rise by $3 million, while sales will fall by a million per year.
The group also warned that supply chains would be disrupted due to scarcity of items.
Canada and Mexico account for more than a quarter of all US imports.
Trump signed the three executive orders at his Mar-a-Lago private club in Florida.
Nations fight back!
Canadian Prime Minister Justin Trudeau then announced “25% trade tariffs on $155 billion worth of American goods.” Mexican President Claudia Sheinbaum announced that her country will implement a “plan B,” which includes retaliatory tariffs.
According to Trudeau’s office, the leaders of both countries spoke on Saturday and “agreed to continue working together in areas of common interest and to enhance the strong bilateral relations between Canada and Mexico.”
Canada announced on Sunday a comprehensive list of products affected by its tariffs on $30 billion in American goods, including produce, alcohol, apparel, household appliances, tools, and firearms.
China’s Ministry of Commerce announced Sunday that it will file a lawsuit with the World Trade Organization and “take corresponding countermeasures to safeguard its rights and interests.” The statement stated that the United States is “ineffective in solving its own problems,” including fentanyl use, while also undermining normal economic and trade cooperation between China and the United States.
The three countries are the US’s largest trading partners.
In a lengthy post, Trump wrote: “The ‘Tariff Lobby,’ headed by the Globalist, and always wrong, Wall Street Journal, is working hard to justify Countries like Canada, Mexico, China, and too many others to name, continue the decades long RIPOFF OF AMERICA, both with regard to TRADE, CRIME, AND POISONOUS DRUGS that are allowed to so freely flow into AMERICA. THOSE DAYS ARE OVER! The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the “Stupid Country” any longer. MAKE YOUR PRODUCT IN THE USA AND THERE ARE NO TARIFFS! Why should the United States lose TRILLIONS OF DOLLARS IN SUBSIDIZING OTHER COUNTRIES, and why should these other countries pay a small fraction of the cost of what USA citizens pay for Drugs and Pharmaceuticals, as an example?”
During his inauguration speech on January 20, he referred to it as the “golden age of America.”
In a later post, he targeted Canada.
“We are paying hundreds of billions of dollars to subsidize Canada. Why? There’s no reason. We don’t need anything that they have. We have unlimited energy, should build our own cars, and have more lumber than we can possibly use. Without this massive subsidy, Canada would cease to exist as a viable country. It’s harsh, but true! As a result, Canada should become our cherished 51st state. Much lower taxes and far better military protection for Canadians, with NO TARIFFS!”
Trudeau warned Americans that tariffs “will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities.” And Canadians will have to “check the labels at the supermarket and pick Canadian products, opt for Canadian rye over Kentucky bourbon, or forego Florida orange juice entirely.”
“It might mean changing your summer vacation with plans to staying here in Canada.”
Karoline Leavitt, White House Press Secretary, stated on Friday that tariffs can be beneficial:
“I think Americans who are concerned about increased prices should look at what President Trump did in his first term,” Leavitt told the crowd. “He effectively implemented tariffs and the average inflation rate during the first Trump administration was 1.9%.”
Vice President JD Vance commented on Fox News: “We still have, thank God, the biggest economy in the entire world, the best people and the best workers, but the message from President Trump to the entire world is very clear, we are done being taken advantage of, and we have a president who looks out for the interest of American citizens.”
What it means
Tariffs in the United States are collected by Customs and Border Protection agents at 328 ports of entry.
Trump has claimed that tariffs will generate “trillions and trillions of dollars” from foreign governments.
However, foreign companies are not responsible for paying the duties.
These additional costs can be passed on to consumers. Some U.S. businesses may absorb some of the tariff costs. Tariffs could have a significant impact on the cost of goods sold in America. This includes vehicle parts, including those made in the United States, as well as food imported from Mexico.
Tariff proponents have argued that levies can help protect domestic manufacturers by encouraging them to buy American-made products rather than newly priced imports. Alternatively, companies such as automakers may decide to establish new plants in the United States.
“Come make your product in America,” Trump said virtually last week during the annual World Economic Forum meeting in Davos, Switzerland. “But if you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff.”
According to the Peterson Institute for International Economics, tariffs “have a poor track record” of reviving manufacturing.
Some products, such as toys, clothing, and electronics, are not manufactured in the United States.
About 80% of toys imported into the United States are from China.
According to Capital Economics, the additional costs for products could cause inflation to rise from around 2.9% to as high as 4%, or roughly double the Federal Reserve’s target of 2%.
According to its report from last week, “imposing any of these suggested tariffs would generate a rebound in consumer price inflation this year, taking it further above target and making it harder for the Fed to resume loosening monetary policy.”
What Experts Say
The headline of a Wall Street Journal editorial on Saturday was “The Dumbest Trade War in History.”
“Mr. Trump’s justification for this economic assault on the neighbors makes no sense,” according to the newspaper.
It added: “Drugs may be an excuse because Mr. Trump has made it clear that he likes tariffs for their own sake,” referring to Trump’s remarks on Thursday that the US does not require oil or lumber from its neighbors.
“Mr. Trump sometimes sounds as if the US shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home,” according to the editorial. “This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr. Trump may soon find out.”
Larry Summers, Treasury Secretary under President Bill Clinton, described the impending tariffs as a “self-inflicted supply shock.”
“We are taxing foreign suppliers, so there will be less supply. “That will result in higher prices and lower quantities,” Summers told CNN. “This is a self-inflicted wound on the American economy.” I expect inflation to rise over the next three or four months as a result of the levy on goods that people buy.”
Last week, Jamie Dimon, CEO of JP Morgan, the world’s largest bank, stated that tariffs are either “an economic tool” or “an economic weapon,” depending on how they are applied.
Dimon told CNBC: “I would put it in perspective: if it’s a little inflationary, but it’s good for national security, then so be it. “I mean, get over it.”
According to CNBC, other corporate leaders were generally critical of the orders.
The National Retail Federation’s executive vice president of government relations, David French, stated, “Imposing steep tariffs with three of our closest trading partners is a serious step, and we strongly encourage all parties to continue negotiating with the appropriate seriousness to avoid shifting the costs of shared policy failures onto the backs of American families, workers, and small businesses.”
The president of the United Auto Workers Union, Shawn Fain, stated, “We do not support using factory workers as pawns in a fight over immigration or drug policy.” We are willing to support the Trump administration’s use of tariffs to prevent plant closures and limit the power of corporations that pit American workers against workers from other countries.
“But so far, Trump’s anti-worker policy at home, including dissolving collective bargaining agreements and gutting the National Labor Relations Board, leaves American workers facing worsening wages and working conditions.”
Jay Timmons, president and CEO of the National Association of Manufacturers, stated that a “25% tariff on Canada and Mexico threatens to upend the very supply chains that have made US manufacturing more competitive globally.”
“The ripple effects will be severe, especially for small and medium-sized manufacturers who lack the flexibility and capital to quickly find alternative suppliers or absorb rising energy costs.
“These businesses, which employ millions of American workers, will experience significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at competitive prices and jeopardizing American jobs.”
