Here we go again, Donald Trump’s bargaining concept is getting in the way of economic realities. Threatening to impose a 25% tariff on all Canadian and Mexican products entering the U.S. is simply nonsense, and most likely in violation of the current U.S.-Mexico-Canada trade agreement. This agreement, by-the-way signed during the former President’s first term, is up for re-negotiation in two years.
The U.S. is the largest importer of goods in the world, with Mexico, China and Canada its top three suppliers. Take for example the North American automotive sector which relies on integrative parts and components from both Canada and Mexico, whereby auto plants on both sides of the border and some production lines would most likely screech to a halt. Not only can higher tariffs cause increased inflation, but they would also cause job losses in all three countries. The tariffs, if implemented, could dramatically raise prices for consumers on everything from gas to automobiles to agricultural products.
For some reason, President-elect Trump believes that putting economic pressure on Mexico and Canada would force both countries to tighten up their borders against illegal migrants and the influx of drugs like the deadly synthetic opioid fentanyl. Mexico’s efforts to fight drugs — which are manufactured by Mexican cartels using chemicals imported from China — have apparently weakened in the last year. However, the new Mexican President Claudia Sheinbaum has argued that the flow of drugs is more of a problem of public health and drug consumption in American society, and rightly so. On the other hand, both Mexico and Canada have an argument when it comes to the influx of weapons smuggled in from the United States, estimated to account for over 90% of arms smuggled into both countries.
Unfortunately, neither Mexico nor Canada like to be bullied into adherence to some needless policies by an American president, past or present. President Sheinbaum has already declared that the introduction of new tariffs would result in retaliatory measures by Mexico. The Canadian government is already examining the ramifications of increased tariffs, hoping to open up a further dialogue with the new American administration. Hoping to avoid a trade war, both countries have indicated that they are willing to engage in talks on the issues at hand.
What’s obviously a shot across the bow, Trump appears to think that these threats are an effective manoeuvre as part of some form of future negotiating tactics. However, the resulting consequences will be dire for all parties concerned. Canada in particular has clamped down on the flow of fentanyl both into and out of the country. More aggressive attempts have also been made to deal with the influx of weapons from the U.S. There is little doubt that these are security issues on both sides of the border. Canada is also concerned about the potential influx of migrants from the U.S. as a result of Trump’s talks about a “massive deportation” program of illegal migrants during his second term. Northern border security is just as important to Canadians as it is to Americans, and is nowhere close to American concerns over its southern border security.
I believe that the Canadian government will take a more cautious and respectful approach to Trump’s threat than the Mexican government which has warned the U.S. against any blatant attempts to subjugate its sovereignty through such threats. As noted, Sheinbaum’s bristly response suggests that Trump faces a much different Mexican president than he did in his first term. As for Canada, time will tell. In addition, federally there will be an election next year and Trump’s administration will have to face a new Canadian government. Unfortunately, the entire situation does not look good for the future of all three countries, both economically and politically.
FROLITICKS 