Tariff war: Is anyone going to stand up to Donald Trump?
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As Donald Trump imposes high tariffs on some of his closest neighbours and allies, the world is waiting to see who is next, and what the knock-on effects will be - but will anyone stand up to him?
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Read time: 4 minutes
In brief:
- Donald Trump will impose significant tariffs on imports from Canada, Mexico and China, citing national security concerns related to fentanyl and illegal immigration, despite these issues not being equally relevant to all countries.
- Canada and other allies are retaliating with counter-tariffs, but they haven’t made Trump back down.
- The tariffs pose significant economic risks, potentially raising consumer prices in the US, damaging international relationships, and creating broader economic instability that could lead to a global trade war and potential recessions.
What’s the story?
“Tariff”, Donald Trump has made known, is one of his favourite words in the English language.
Now, a few weeks into his presidency, imposing them against some of America’s closest trading allies is fast becoming one of his favourite policies.
The president has made good on his campaign promise, thrusting a 25% tax on goods being imported from Canada, with China facing a 10% rise, with both taking effect from midnight on 3rd February.
While Mexico is also facing a 25% tax, its implementation has been delayed for one month.
Trump has said the decision has been taken to protect America’s national security, first, to stop the high amounts of opioid fentanyl coming across the border and second, to pressure neighbours to to control the flow of illegal immigrants entering the States.
But there are several gaps in Donald Trump’s plan. While these problems may ring true at the southern border, they are not a big issue at the Canadian border.
“It makes no sense with Canada,” Emily Maitlis says, adding it makes “very little sense even in Mexico, who has already been fighting to control its fentanyl amount,” Emily Maitlis says.
While Trump’s tariffs could raise money for the United States government, they could also raise prices for everyday Americans buying everyday goods as both Canada and Mexico have retaliated, slapping an equal 25% tariff on American imports.
As the Trump trade war is well and truly underway, the rest of the world, including Europe and Britain, is looking around and wondering who is next - and, is anyone going to stand up to Trump?
What does victory look like in Donald Trump's trade war?
Will anyone stand up to Trump?
Canadians are united in their anger at the tariffs their neighbour - and supposedly ally - has imposed.
This was most obvious in a viral video of Canadian sports fans booing as the American national anthem played at a basketball game in Toronto ahead of the changes taking effect.
One Canadian listener emailed The News Agents to say Canadians are “beyond mad”, and he’s “never seen this country turn on a dime so fast in opinion and unite.”
Some provinces, he says, including Ontario, Quebec and Nova Scotia are pulling American alcohol off of shop shelves and many supermarkets are applying ‘made in Canada’ stickers to homegrown products, allowing Canadian citizens to avoid buying imported American products.
Trudeu’s “big weapon”, though, Emily Maitlis says, is oil. “America exports 40% of its oil from Canada. If Trudeau wanted to go nuclear, he could just block oil experts.”
But the outgoing Canadian prime minister Justin Trudeau’s retaliatory tariffs on the US are “more in sorrow than in anger,” Jon Sopel thinks, and so far they aren’t causing Trump to back down.
"If they want to play the game, I don't mind. We can play the game all they want,” Donald Trump said.
What’s The News Agents’ take?
“Donald Trump is engaged in an exercise of how to alienate people and lose influence,” Jon says.
The tariffs are a “calculated risk,” he says, adding: “although I don't know how much calculation has gone into the risk.”
Trump believes this will generate huge income for the US government - the danger, though, is that the price of goods will go up for shoppers in America.
“The theory on tariffs is that you generate this huge amount of income that importers have to suddenly pay 25% on foreign goods coming into the country. The options are for the manufacturer to cut the amount of profits that they’re going to make, to absorb this 25% extra cost or they can pass it on to the consumer, in which case the consumer is worse off.”
And if Americans doing their weekly food shop in America suddenly see a sharp rise in the price of vegetables or beer, or whatever it might be, “they're going to blame Donald Trump for it,” Jon adds.
“If Trump’s popularity ratings go down as a result, I think he will ditch this fast, because I think that it will then seem to be a risk that has not paid off, but at the moment, he's all in.
“In these global trade wars, you very rarely get big winners”.
Looking closer to home, the UK is unlikely to be a big winner either.
Donald Trump has already said that tariffs will also be applied on the EU and the UK, adding that both were acting “out of line”.
But Keir Starmer hasn’t stood shoulder-to-shoulder with Canada, or retaliated to Trump’s incoming threat - instead, he has been like a schoolboy who hasn’t completed his homework, and is sitting at the back of the classroom hoping not to get called on, Jon says.
“I think that British policy at the moment is to keep your head down, try not to get noticed, and let's hope that we're not in Donald Trump's crosshairs.”
The ‘head down’ approach will only get you so far though, for if China, or Mexico go into a recession, if tariffs are imposed on the EU, the UK will feel the “knock-on effects”, Emily says.
The National Institute for Economic and Social Research estimated last month that a global trade war could lead to Sterling depreciating by around 10-15% to the dollar, which would feed into higher import prices and higher inflation.
“So without us doing anything, even hiding at the back of the classroom with our undone homework, we are still in a position where we are going to suffer.”
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