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The United States Begins Imposing New Tariffs on Canada, China, and Mexico: Potential Economic Impacts
In a move anticipated by American companies, the United States began imposing tariffs yesterday on imports from Canada, Mexico, and China, marking the start of a trade war with its closest neighbors and allies. The administration of U.S. President Donald Trump announced a 25% tariff on products coming from Canada and Mexico, while the tariffs on Chinese goods were raised from 10% to 20%.
Countermeasures from the Three Countries
In response to this move, Canada, Mexico, and China announced countermeasures and tariffs on U.S. goods. These actions reflect the escalating trade tensions between the United States and these countries. In this context, U.S. Secretary of Commerce Howard Lutnik stated yesterday evening that President Trump might find a middle ground with Canada and Mexico regarding the tariffs. However, he confirmed that suspending these tariffs again is unlikely.
Economic Consequences for U.S. Companies
Despite hopes from American companies for a delay in tariff implementation, as occurred last month, the decision went into effect yesterday, leaving companies facing higher costs. Kathy Bostiancic, an economic analyst at Nationwide, emphasized that the continued imposition of tariffs will have significant consequences for U.S. companies. These companies will have to choose between absorbing the price increases or passing them onto consumers, who are already suffering from high inflation. Bostiancic added that if these tariffs remain in place for a year, they could reduce U.S. economic growth by a full percentage point and increase inflation by 0.6 percentage points.
Impact of the Tariffs on Business Sectors
Meanwhile, some business owners in the U.S. remain skeptical about dealing with these tariffs. Manuel Sotelo, who manages a Mexican trucking fleet, expressed surprise at the risk of disrupting trade exchanges worth $2.2 trillion annually with Canada, China, and Mexico. He stated that even on the day before the tariffs were imposed, he expected Trump to backtrack, but this did not happen, putting U.S. companies in a challenging position.
Direct Impact on the Restaurant Sector
The restaurant sector in the United States is also feeling the effects of these tariffs. David Spatafore, owner of a restaurant chain in San Diego, mentioned that his business had already been hit by the rising prices of eggs and dairy products last month. He added that the new tariffs on Canadian products such as lumber and steel had become an additional burden on the restaurant sector, which already struggles with thin profit margins. Spatafore said, “Where are we supposed to absorb the price increases?”
On the other hand, Steve Bernard, CEO of Mission Produce, a company dealing with avocados and mangoes in California, confirmed that his company would not immediately raise prices due to having stockpiled products before the tariffs. However, he warned that prices would see significant changes if the tariffs lasted more than ten days. Bernard expected large retailers to resist price increases, while smaller stores and independent chains would have no choice but to raise prices, as they do not have large inventories.
The Economic Future Amidst New Tariffs
These new tariffs mark the beginning of a new phase in trade relations between the United States and the three countries. Despite mounting economic pressure, President Trump faces significant challenges in determining the future course of trade relations. Experts are now wondering whether the U.S. economy will continue to bear the long-term effects of these trade policies.
Sources:
- CNBC
- Reuters
- The New York Times
