President Donald Trump’s prices on Canada and Mexico have triggered panic and conviction of the best trade partners in the United States, who said that the samples would devastate the economy of North America and overthrow decades of integration.
Politicians, business leaders and professional associations in the three countries have reacted with disbelief, warning The prices would lead to inflation, the disturbances of the supply chain and generalized job losses.
On Saturday afternoon, Donald Trump signed an executive decree imposing 25% prices in terms of Canadian and Mexican products from rates on Tuesday and 10% on energy. He also imposed an additional 10% rate on goods from China.
Trump said the levy would be on Canada and Mexico goods to “keep them responsible” for the promises to stop illegal drugs and migration flows in the United States.
Mexico president Claudia Sheinbaum announced prices on American products in retaliation, while Canadian Prime Minister Justin Trudeau was to do the same later on Saturday.
The new trade obstacles would slow growth and accelerate inflation in the three countries for the coming years, with the biggest shocks for Mexico and Canada, economists from the Peterson International Economics Estimated Economics.
They will also upset decades of deepening integration in North America. Mexico and Canada send more than three-quarters of their exports to the United States, underground by a three-way trade agreement, USMCA, signed during Trump’s last presidency.
“The prices will considerably increase the cost of everything for everyone: every day, these prices are in place, this hurts families, communities and businesses,” said Candace Laing, president of the Canadian Chamber of Commerce.
American companies with operations in the region will be affected. The American Chamber of Commerce said the prices would disrupt the supply chains.
Trump has long concentrated his anger on the South American border with Mexico, but he clearly indicated in the executive decree that he considers Canada as part of the problem.
“Criminal networks are involved in human and smuggling traffic operations, allowing illegal migration not adapted to our northern border,” said the decree.
Xavi Delgado of the Wilson Center Institut of Washington DC said that the United States had never said that the measures it should take on the northern border.
“The president can only implement prices by the ieepa [International Emergency Economic Powers Act] In response to an “unusual and extraordinary threat”. Even if the White House believes that its trade deficit with Canada is unfair, this is not an extraordinary threat; A crisis on the northern border, as it describes it, would do it, “he said.
Mexico private sector leaders said there was panic and deep nervousness after Trump’s announcement. Many had hoped that the country would benefit from a second term Trump, with little believing that it would follow his threats.
Pedro Casas Alatriste, director of the American Chamber of Commerce in Mexico, said the prices were a step back for a relationship built over the decades.
“Companies and consumers of the three economies will have consequences if this measure is not reversed; [it means a] Increased costs for producers and exporters, loss of jobs, inflation and less purchasing power for our families, “he said.
Mexico’s economy is already slowing down and should fall into a recession if the prices are imposed for a substantial period. Tiff Macklem, Governor of the Bank of Canada, said that American prices are likely to put Canada in a recession.
“The only winners of the taxation of prices against Mexico and Canada by the United States are the main competitors in North America,” said Kenneth Smith, a former Mexican commercial negotiator, adding that he has damaged the American credibility as a business partner.
The Mexicans were shocked by the language used in the White House information sheet on prices, which accuses the government of Sheinbaum directly to have an “intolerable alliance” with the country’s drug cartels. It was not clear what Mexico could do so that the prices were deleted.
Since Trump was elected and began to threaten prices in November, Canadian and Mexican delegations have been trying to convince the president that such measures would also affect the American economy.
Some Trump republican colleagues have also expressed their concerns about the announcement of the president’s price, stressing that Canada was their main trading partner.
John Llewelyn, partner at Independent Economics, Council, and a former OECD economist, said that the main consequence of prices would be inflation, all countries likely to injure themselves, including the United States.
“The era of stability of 80 years in the rules and the conduct of economic and financial relations between countries has ended today,” he said.
