Trump Promises Tariffs on Canada and Mexico, Signs Orders for Review
Reports by April 1
·
Customs Department Replaced by New
Agency
·
25 percent tariff on products from
Canada and Mexico on Feb. 1 and might impose levies on most American imports,
as he signed an executive order directing federal agencies to deliver a
sweeping review of U.S. trade policies by this spring.
·
Mr. Trump signed an executive order on
Monday directing various agencies to study a wide variety of trade issues with
an eye toward future tariffs, but he did not impose any new levies immediately,
as he had previously threatened.
·
Flows of migrants and drugs from
Canada, China and Mexico to the United States, and the compliance of those
three countries and others with their existing trade agreements with the United
States.
·
Investigate the causes of large and
persistent trade deficits and “recommend appropriate measures, such as a global
supplemental tariff or other policies, to remedy such deficits.
·
The External Revenue Service to
collect tariffs and duties from foreign sources. Tariffs and other import
duties are currently collected by Customs and Border Protection.
·
The next few months identifying
countries the United States could negotiate new trade deals with, as well as
carrying out a full review of the U.S. industrial and manufacturing base to
assess whether further national-security-related tariffs are warranted.
·
By ordering investigations into a
variety of trade topics, Mr. Trump may firm up the legal rationale that will
help his tariffs survive court challenges, while also giving some of his top
trade officials time to be confirmed by the Senate
·
Canada has said it planned to
retaliate with tariffs and other trade restrictions if Mr. Trump
went ahead with his plan, and Mexico has also threatened its own
tariffs on American exports.
· During his first term, Mr. Trump rocked the country’s global trade relationships by imposing tariffs on foreign washing machines, solar panels, metals and a variety of products from China. Those moves nearly doubled the average tariff rate applied to imported goods, though U.S. tariffs remained comparatively low by international standards.
The president said he planned to put tariffs
on America’s neighbors on Feb. 1, as he signed an executive
order mandating a sweeping review of U.S. trade policy.
[ABS
News Service/21.01.2025]
President Trump said on Monday night that
he planned to impose a 25 percent tariff on products from
Canada and Mexico on Feb. 1 and might impose levies on most American imports, as
he signed an executive order directing federal agencies to deliver a sweeping review
of U.S. trade policies by this spring.
Speaking to reporters from the Oval Office
on Monday evening, Mr. Trump said he was thinking of putting tariffs on Mexican
and Canadian products because those nations were allowing “mass numbers of people
to come in and fentanyl to come in.” Asked when he might put those in place, Mr.
Trump said, “I think we’ll do it Feb. 1.”
Mr. Trump also said he “may” impose a universal
tariff on all imports, saying that “essentially all countries take advantage of
the U.S.”
The comments renewed the threat of an imminent
trade war, just hours after such an outcome had appeared to recede. Mr. Trump signed an executive order on Monday directing various
agencies to study a wide variety of trade issues with an eye toward future tariffs,
but he did not impose any new levies immediately, as he had previously threatened.
Still, the executive order could tee up
a variety of significant trade actions in the months to come. The order directed
Mr. Trump’s officials to deliver reports to him, mostly by April 1, assessing unfair
trade practices, currency manipulation, U.S. technology controls and discriminatory
foreign taxes.
It ordered U.S. officials to examine flows of migrants and drugs from Canada, China and Mexico to
the United States, and the compliance of those three countries and others with their
existing trade agreements with the United States.
The executive order also called for officials
to investigate the causes of large and persistent trade
deficits and “recommend appropriate measures, such as a global supplemental tariff
or other policies, to remedy such deficits.”
Mr. Trump’s order also followed through
on his recent comments to create an agency he has called the External Revenue Service
to collect tariffs. It asked officials to “investigate the feasibility of establishing
and recommend the best methods for designing, building and implementing” the External Revenue Service to collect tariffs and duties
from foreign sources. Tariffs and other import duties are currently collected by
Customs and Border Protection.
U.S. officials will also spend the next few months identifying countries the United States
could negotiate new trade deals with, as well as carrying out a full review of the
U.S. industrial and manufacturing base to assess whether further national-security-related
tariffs are warranted.
In his inauguration address on Monday,
Mr. Trump said he would “immediately begin the overhaul of our trade system to protect
American workers and families.”
“The American dream will soon be back and
thriving like never before,” he added.
Mr. Trump’s advisers say he remains more
convinced than ever that tariffs can be used to great advantage. The executive order
will tee up the president’s ability to deploy tariffs on numerous targets should
he so choose, moves that could still scramble international supply chains and spawn
global trade wars.
People familiar with the plans said the
president and his advisers have been favoring a combination
of trade policies like those he floated on the campaign trail. Those include a universal
tariff on foreign products, a higher tariff on China and separate measures that
could address the trade relationship with Mexico and Canada by imposing taxes on
those countries as well.
Mr. Trump has praised tariffs for their
ability to help U.S. factories, raise revenue to help pay for the tax cuts he hopes
to enact and generally serve as a source of leverage in negotiations with foreign
countries.
While managing trade is technically the
domain of Congress, various trade laws have given the president wide-ranging powers
to issue tariffs. The president can use them to defend U.S. national security, answer
unfair trade practices and counter various types of international emergencies.
Mr. Trump and his advisers are continuing
to debate the best method to issue their tariffs, but they believe they have the
legal authority to use any of them, people familiar with the deliberations said.
Mr. Trump said on social media in November
that he would impose tariffs on Canada and Mexico on his first day in office. In
response, the Canadian and Mexican governments have tried to mollify Mr. Trump and
ward off tariffs. They have arranged meetings with the president and his advisers,
and reassured him about the measures they are taking to secure their borders.
Still, both governments have also warned
that they will respond to any tariffs with penalties of their own. Canada has said it planned to retaliate with tariffs and other trade restrictions
if Mr. Trump went ahead with his plan, and Mexico has also threatened its own tariffs on American exports.
“Our country is absolutely ready to respond
to any one of these scenarios,” Dominic LeBlanc, the Canadian finance minister,
said on Monday evening. “We still continue to believe that it would be a mistake
for the American government to proceed with imposing tariffs.”
Some U.S. manufacturers credit the tariffs
that Mr. Trump imposed during his first term — and that President Joseph R. Biden
Jr. kept in place — with helping their businesses survive amid intense competition
from countries like China.
But economists and other businesses
argue that tariffs can also cause economic harm, by raising costs for households
and businesses that rely on imported products, and inciting retaliation from other
governments that can hurt U.S. exports.
Lydia Cox, an economist at the University
of Wisconsin-Madison, described tariffs as “a pretty blunt instrument” in an online
forum hosted by the Harvard Kennedy School last week. Tariffs offer some potential
benefits for protected industries, she said, “but they create a lot of collateral
damage along the way.”