As the world began to recover from the COVID-19 pandemic, the war that broke out on the European continent triggered economic shocks and an energy crisis worldwide. Climate disasters followed and then another armed conflict in the Middle East, all of which have had a negative effect on both wealthy and poor countries. What else could possibly happen to make things worse, many wondered. Well, surprisingly or not the newly elected, 47th President of the United States of America, Donald Trump, made headlines as he stepped into the White House and signed two dozen executive orders on his first day of presidency. One of the many controversial decisions was the imposing of import tariffs on goods originating from Mexico, Canada, and China. Rapid negotiations with these states followed, and Trump agreed to hold off imposing 25% tariffs on Canadian and Mexican goods for 30 days, while the 10% tariff on Chinese imports came into effect. In response, Beijing announced retaliatory tariffs on a raft of American products, including a 15% tariff on coal and liquefied natural gas and a 10% tariff on crude oil and agricultural machinery. Today, the world is watching the opening chapter of what could become another costly trade war. We talked to several experts to learn more about the immediate consequences of Trump’s decision on the economy of the USA and also on its partners – Mexico, Canada, and China.
Key Takeaways:
- Mexico, Canada, and China collectively contribute to over 40% of the United States’ total trade in goods.
- According to experts, the proposed U.S. tariffs have sparked economic consequences that are disrupting global supply chains, increasing consumer prices, altering industrial clusters, and ultimately affecting local daily lives.
- Tariffs may shrink export revenues and slow key sectors in Canada and China, prompting market shifts and retaliation. Mexico’s auto and electrical industries risk disruption due to ties to U.S. supply chains.
- This decision could also rapidly destroy the reputation of the U.S. as a reliable ally, a morally ethical nation, and a leader
DevelopmentAid: What are the immediate consequences of the USA’s newly imposed tariffs on the economies of the U.S., Mexico, Canada and China?
“Flirting with mercantilism – the USA has sparked economic consequences that are disrupting global supply chains, causing international economic shocks, altering industrial clusters, and ultimately affecting local daily lives.
-
-
- USA: Tariffs drive up production costs forcing firms to find alternative supply chains. USA industries suffer short-term disruptions which causes higher market prices. Capital stakeholders benefit from increased margins, reinforcing the concentration of wealth.
- Mexico: Adopting a dual approach: a defensive public stance paired with internal compliance to U.S. pressures. Exports to the USA will contract, compelling industries to adjust and fragment their integrated clusters which delays urban development and industrial growth.
- Canada: Shifts towards nationalist consumption through a public strategy to replace U.S. imports with local alternatives will disrupt established cross-border supply chains and diminish the benefits of industrial specialization and urban connectivity.
- China: Responding with measured retaliatory tariffs has prompted a strategic reorientation of Chinese firms toward alternative markets and self-sufficiency, further fragmenting global supply chains.
-
Overall, the tariffs are triggering immediate and profound realignments in global supply chains and trade. While the USA capital will benefit, all four countries are likely to experience inflationist trends and rising prices. We are witnessing a pivotal moment of economic recalibration, leading to a new era of uncertainty and fragmented global integration. I see the development of new industries, trade routes, production clusters, and agreements as measures that could significantly shape the course of the century.”
“The immediate implications of President Trump’s tariffs on China, Canada, and Mexico include increased costs for businesses and consumers within the United States. These tariffs will likely result in higher prices for imported goods, subsequently increasing production costs for American manufacturers that depend on imported materials. This escalation in costs could undermine their competitiveness. For Canada and China, the introduction of tariffs may lead to diminished export revenues and economic deceleration in the affected sectors, notably steel, aluminum, and technology. Canadian enterprises may be compelled to explore alternative markets, while China could reciprocate with tariffs on U.S. goods, thereby impacting American agriculture and manufacturing industries. With Mexico, potential disruptions could arise in sectors such as auto and electrical manufacturing, which is closely intertwined with U.S. supply chains. This unpredictability may dampen investor confidence and influence currency exchange rates. In the short term, all four economies could experience heightened market volatility, interruptions in supply chains, and alterations in trade relations. The long-term consequences will be contingent upon the outcomes of ongoing negotiations and possible retaliatory actions.”
“The imposition (or threat) of tariffs on Canada, Mexico, China, and the EU will have a wide range of devastating impacts on the United States and, perhaps to a lesser extent, on the other countries affected. Obviously, the cost of imports to the U.S. will rise for U.S. consumers, as will the cost of domestic products that use imported inputs. The targeted countries will impose retaliatory tariffs, which will reduce U.S. exports. The impact on outputs and jobs will probably be greater in Canada and Mexico than in the U.S. since their exports to the U.S. represent larger shares of their GDP and employment than the U.S. exports represent to in the U.S. economy. More importantly, Trump’s frivolous imposition of these tariffs makes it clear to the whole world that he is trying to pick fights with no justification beyond his apparent interest in being a bully and perhaps acquiring the power that can go with being a bully. This has already created fury among those allies directly affected and raised alarm and concern among those who have so far only been threatened. It will rapidly devastate the reputation of the U.S. as a reliable ally, a morally ethical nation, and a leader of what used to be called ‘the free world’. Within the US, it will increase conflict between those who support Trump’s antics and those who believe we should work for global collaboration rather than fomenting conflict.”
“70% of Canadian international trade is with the U.S. Therefore, the immediate consequences of Trump’s tariffs, should they come into full force, will be increases in consumer prices and shortfalls in supplies of some items. Canada’s initial response has still not been fully articulated, but would involve retaliatory tariffs on U.S. exports from Republican Party states (Florida oranges, Kentucky bourbon, etc.). These actions will drive up prices for producers and consumers, interfere with supply chains, and fray trade relations. They will also trigger some grudging investment by Canadian businesses into the U.S. to get within tariff walls. Disproportionate adverse effects on the Canadian economy will result in further downward pressure on the Canadian dollar, making U.S. dollar-denominated imports into Canada more expensive. This will intensify inflationary pressures and make investment for Canadians into the U.S. more expensive. It will also trigger calls for trade diversification, a sensible move under any circumstances to reduce Canada’s concentration risk. However, trade diversification efforts by Canada in the past have shown limited results. Should Canada apply punitive tax or other measures on critically needed goods for defense and national security, tensions will deepen. An environmental border tax slapped on U.S. goods entering Canada is a distinct possibility. A potential third stage where oil and gas, uranium, electricity, and other Canadian exports of importance to the U.S. economy are reduced or curtailed would be a sign of a major deterioration in relations.”
As a result of the USA’s 90-day freeze on external aid and USAID stop-work orders, it is becoming more difficult for experts to find a job in the international development sector, and the competition is much higher these days. One way to succeed is to stay one step ahead of the competition by having access to more time- and resource-saving tools such as DevelopmentAid’s Individual Professional Membership. With just a few clicks, experts can check, filter, and access over 5,500 open positions. In addition, if looking for a long-term position, professionals can opt for short-term consultancy projects until they land a long-term opportunity. This can be done by accessing tenders and grants for individuals. In addition to this, candidates can approach organizations or funding agencies directly, send them their resume, and express their interest. With all these tools and methods at an expert’s disposal, landing a job can be less challenging in these uncertain times.
