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U.S. President Donald Trump imposed a 25% levy on goods from Canada and Mexico, along with a 10% tariff on China, in what could be the opening stages of a full-scale trade war likely to create new headaches for executives that have been wrangling with higher costs for several years.
Budget with ET Budget Highlights: Gareeb, youth, annadata and naari feature in Budget. What about taxes? New vs Old tax regime: Here's a decoder to help you choose the right one Will you pay more under new tax regime or old? Calculate here According to Tax Foundation estimates, the new tariffs will impact $1.4 trillion worth of goods, more than triple the $380 billion targeted during his first term.
Trump's new tariffs on Canada and Mexico are expected to disrupt North American supply chains and increase prices. The tariffs cover nearly $900 billion worth of goods imported from both countries. The 25% tariffs are predicted to heavily impact the auto and electronics industries.
A 10% tariff on Canadian energy, including oil and gas, marks an increase from previous policy. Food prices, including avocados and tomatoes, may also rise due to the tariffs on agricultural imports. Canada sends almost 80% of its exports, valued at $410 billion, to the US.
The tariffs will particularly affect Canadian vehicle and energy exports, which make up over 40% of what Canada sends to the US. Ontario's auto sector is vulnerable due to parts repeatedly crossing the border during manufacturing. “Various parts cross the border multiple times before ending up in a finished product,” explained Robert Kavcic of Bank of Montreal.
Building material costs may also increase due to tariffs on Canadian lumber and gypsum. Artificial Intelligence(AI) Java Programming with ChatGPT: Learn using Generative AI By - Metla Sudha Sekhar, IT Specialist and Developer View Program Artificial Intelligence(AI) Basics of Generative AI: Unveiling Tomorrows Innovations By - Metla Sudha Sekhar, IT Specialist and Developer View Program Artificial Intelligence(AI) Generative AI for Dynamic Java Web Applications with ChatGPT By - Metla Sudha Sekhar, IT Specialist and Developer View Program Artificial Intelligence(AI) Mastering C++ Fundamentals with Generative AI: A Hands-On By - Metla Sudha Sekhar, IT Specialist and Developer View Program Artificial Intelligence(AI) Master in Python Language Quickly Using the ChatGPT Open AI By - Metla Sudha Sekhar, IT Specialist and Developer View Program Marketing Performance Marketing for eCommerce Brands By - Zafer Mukeri, Founder- Inara Marketers View Program Office Productivity Zero to Hero in Microsoft Excel: Complete Excel guide 2024 By - Metla Sudha Sekhar, IT Specialist and Developer View Program Finance A2Z Of Money By - elearnmarkets, Financial Education by StockEdge View Program Marketing Modern Marketing Masterclass by Seth Godin By - Seth Godin, Former dot com Business Executive and Best Selling Author View Program Astrology Vastu Shastra Course By - Sachenkumar Rai, Vastu Shashtri View Program Strategy Succession Planning Masterclass By - Nigel Penny, Global Strategy Advisor: NSP Strategy Facilitation Ltd. View Program Data Science SQL for Data Science along with Data Analytics and Data Visualization By - Metla Sudha Sekhar, IT Specialist and Developer View Program Artificial Intelligence(AI) AI and Analytics based Business Strategy By - Tanusree De, Managing Director- Accenture Technology Lead, Trustworthy AI Center of Excellence: ATCI View Program Web Development A Comprehensive ASP.
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Food prices may also be impacted, as Mexico is a major supplier of fruits and vegetables to the US. Over 80% of US avocados come from Mexico. Trump cited emergency economic powers related to illegal immigration and drug trafficking as justification for the tariffs, which also include a 10% tariff on Chinese goods.
Experts question whether the tariffs on Canada and Mexico comply with the USMCA trade agreement . Some suggest the tariffs could be a tactic to strengthen the US position before the 2026 USMCA review. Economists warn these tariffs and potential retaliation could lead to recessions in Canada and Mexico, and a possible downturn in the US.
“The tariffs send a clear message, reinforcing Trump's America First stance while using trade as a geopolitical tool,” said EY chief economist Gregory Daco. He added that markets will see this as increased political uncertainty, and investors will anticipate inflation and supply chain issues. Mexico’s President Claudia Sheinbaum has announced retaliatory tariffs.
“Mexico and Canada could challenge the move under USMCA, while China may counter with targeted restrictions,” Daco noted. He also warned of the risk of escalation into a larger trade conflict. (You can now subscribe to our Economic Times WhatsApp channel ).
