The New York Times reported that President Donald Trump has taken one of his biggest gambles during his presidential term by initiating tariffs on imports from Canada, Mexico, China and counterpart tariffs on all partners.
This is seen as a "shooting" to launch a new trade war that could cause serious damage to the US economy and the global economy.
The reason behind the controversial decision
Trump has given various reasons for the tax, including sanctions on countries that cannot stop drug flows and migration to the US, forcing businesses to produce domestically, and retaliating against countries that he says are taking advantage of the US economy. Mr. Trump even accused Canada of being "hostly" towards US banks.
Canadian Prime Minister Justin Trudeau expressed confusion with Mr. Trump's motives and said that this was an effort to weaken the Canadian economy. "What he wants is to see the whole Canadian economy collapse, because that will make it easier for us to join the US," Trudeau said at a press conference. "It's never going to happen. We will never be the 51st state of the United States."
In a concessionary move, on March 5, US President Donald Trump postponed the imposition of tariffs on cars imported from Mexico and Canada for a month.
Reactions of trading partners
Canada responded by imposing tariffs on $20.5 billion in imports from the US, and warned that other measures would be taken. "He could hurt the Canadian economy, but American families will also be hit hard," Trudeau said.
Mexico's President Claudia Sheinbaum rejected Trump's argument that the tariffs are aimed at blocking fentanyl's flow into the US. "We work together to fight drug trafficking for humanitarian reasons, but the US government must also take responsibility for the opioid crisis in its country," Sheinbaum stressed.
China also responded harshly. According to BBC, the world's two leading economies are getting closer to a trade war. On March 4, the Chinese Embassy in the US posted on social network X: "If war is what the US wants, whether it is a tariff war, a trade war or any other war, we are ready to fight to the end."
Concerns from experts
Many economists warn that Mr. Trump's tariff policies could increase inflation and slow down US economic growth. Kathy Bostjancic, chief economist at Nationwide, estimates that if these tariffs are maintained and other countries continue to pay, the US economic growth rate could fall 1%, to just 1% in 2025, compared to 2.5% in 2024.
"American people expect President Trump to cut costs and boost the economy. But tariffs on Canada and Mexico are putting those targets in a dangerous position," said Michael Hanson, senior vice president of the US Retail Leaders Association.
Experts warn that this strategy could harm the economy in the long term. "Supply chain transformation is not happening immediately. Therefore, negative impacts on prices and economic growth will be inevitable," said John C. Williams, president of the New York Federal Reserve.
Republican politicians are reserved about Trump's decision. Senator John Thune said the tariffs could be "passed temporarily," while President Ted Cruz hoped they would be "a deterrent."
However, trade unions and some businesses benefiting from the tariffs supported Mr Trump's move. The American Automobile Workers Federation hailed the decision as "a strong act to end the free trade disaster".
Is the tariff war a wise strategy or a reckless economic gamble? That still has to wait for a response.
