President Trump on Saturday fulfilled his threat to impose strict tariffs on Mexico, Canada, and China, setting the stage for a destabilizing trade war with the United States' largest trading partners. Trump imposed tariffs of 25 percent on all goods from Canada and Mexico, highlighting Canadian energy and oil exports. They will be taxed at a rate of 10 percent.
Trump also imposed 10-percent tariffs on Chinese goods. The duties will take effect immediately after midnight on Tuesday and will be added to the existing tariffs.
At the same time, the law on emergency sanctions was applied to tighten the tariffs. Trump declared a state of emergency under the International Emergency Economic Powers Act of 1977 (IEEPA), citing an «emergency threat» posed by fentanyl smuggling (a narcotic opioid analgesic. — NT) and illegal immigration. The law grants the president broad powers to impose economic and financial sanctions during a crisis.
IEEPA gave Trump, in his second week of his second term in the White House, the fastest path to imposing tariffs, as the trade laws he used in the first four years of his administration to impose duties on steel, aluminum, and Chinese goods would have required months of discussions and public consultations.
As noted by Reuters, President Richard Nixon similarly used the Trading with the Enemy Act of 1917 in 1971 to impose 10-percent tariffs to curb import growth amid a balance of payments crisis following the abandonment of the gold standard for the dollar.
The courts upheld Nixon's decision, but Jennifer Hillman, a professor of trade law at Georgetown University and a former appellate judge of the World Trade Organization, believes that Trump's actions may not meet the emergency criteria. There must be a causal link between the emergency — fentanyl and migrants — and the remedy: universal tariffs on Canada, Mexico, and China.
«At the very least, I believe that in this case, such a connection does not exist», — said Hillman. «The tariffs will not only apply to fentanyl, so there is no clear reason why tariffs on all goods are «necessary» to address the fentanyl or migrant issues».
Mexico and Canada immediately vowed to impose their own tariffs. On Tuesday, Canadian Prime Minister Justin Trudeau announced retaliatory tariffs, starting with 25-percent tariffs on American goods worth about 20 billion dollars, and another 85 billion dollars — over the next three weeks.
Mexican President Claudia Sheinbaum promised to impose both tariff and non-tariff measures in response but has not yet provided details. The measures are expected to include retaliatory duties of 25% on American goods.
The Chinese Ministry of Commerce stated that China will file a lawsuit against the United States at the World Trade Organization and also promised to take «appropriate countermeasures to resolutely protect its rights and interests».
Photo: The New York Times