Here are some key points about how the tariffs will work and what impact they will have.
The United States is an essential trading partner for the three targeted countries: Canada, China and Mexico. But the impact will fall disproportionately on the US’s immediate neighbors than on China, the world’s second-largest economic power.
For Mexico and Canada, the United States is by far the largest customer -- accounting for 77 percent of Mexican goods exports and 84 percent of Canada’s, according to the two countries’ statistical agencies.
The United States had sizable commercial deficits with all three countries in the first 11 months of 2024: more than $270 billion with China, $157 billion with Mexico and $55 billion with Canada.
Given its greater exposure to US trade, Mexico is expected to be the hardest hit. According to Oxford Economics, the tariffs imposed Saturday could raise the inflation rate there to 6 percent annually, up from 4.2 percent in December, while the nation’s currency, the peso, could see a 7 percent weakening -- with attendant risks of recession.
For the US economy, the clearest impact should concern prices. The gamut of affected products is enormous -- ranging from automobiles and avocados from Mexico, to fowl and petroleum from Canada and iPhones from China, just for starters.
The Tax Foundation, a think tank generally favorable to lower taxes, estimated Friday that the new tariffs could trim US GDP by 0.4 percent over the long term and add $830 in annual costs to each American household this year.
How are the affected countries responding?
Canada reacted first, announcing 25 percent tariffs on American products eventually worth Can$155 billion (US$106.6 billion). Tariffs on a first tranche of products worth $30 billion will take effect Tuesday.
As for China, its trade ministry said Beijing would take “corresponding countermeasures to resolutely safeguard our own rights and interests.”
Both Beijing and Washington say they have filed complaints on the dispute with the World Trade Organization (WTO).
And in a sharply worded statement, Mexican President Claudia Sheinbaum announced that retaliatory tariffs would be imposed on US products. She gave no details.
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