As Trump slugs Canada, Mexico and China with tariffs, industry groups hope trade war weapon isn’t pointed at their feet
Tech lobby isn't at the negotiating table, fears unintended consequences
Updated US President Donald Trump has delivered on his campaign promise to introduce tariffs, by slapping a 25 percent duty on imports from Canada and Mexico, and an extra ten percent impost on goods from China. Industry groups quickly responded by saying this is not a great idea.
Trump announced the tariffs in a Saturday executive order and accompanying fact sheet.
The latter claimed the levies, which likely means higher costs for buyers in the US, are needed "to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country." Canada, we note, for one thing plays almost no role in the supply of fentanyl into the United States.
Oil, natural gas, coal, uranium, critical minerals, and electricity from Canada will be taxed at a lower rate of 10 percent.
The tariffs and the rationale for them were widely expected. Analysis of their impact before Trump confirmed their introduction suggested they could increase the price of a laptop by 68 percent for US shoppers, and slow economic growth in America and elsewhere.
The 68 price rise won't happen, because that figure was reached after considering tariffs on China far higher than the extra ten percent Trump announced. In response to Trump’s announcement, the tech industry nonetheless expressed concerns about the impact of the import taxes. The conservative-leaning Wall Street Journal meanwhile called it the "dumbest" trade war.
Tech lobby group the Information Technology Industry Council (ITIC) called for the Trump administration to “aim for clear, constructive outcomes in its negotiations with foreign governments, avoid trade restrictions and weakened North American economic ties to the extent possible, and roll back the tariffs when outcomes are achieved.”
ITIC warned of “harms that sustained tariffs would have on US consumers, workers, manufacturers, and exporters.” The org also seemingly protested it had not been consulted.
“As these actions are implemented, it is essential to bring industry and stakeholders to the table to help the government reach its desired result, limit unintended consequences, and develop a holistic and successful trade policy approach,” its reaction to the tariffs states.
The National Manufacturers’ Association wrote that its members “understand the need to deal with any sort of crisis that involves illicit drugs crossing our border” but also feels “protecting manufacturing gains that have come from our strong North American partnership is vital.”
That partnership, the association wrote, means “one-third of critical US manufacturing inputs now come from Canada or Mexico, rather than from competitors like China that often engage in unfair trade practices.”
Tariffs on Canada and Mexico, which share a free trade agreement with America, therefore threaten to “upend the very supply chains that have made US manufacturing more competitive globally.” The association feels its smaller members will struggle to “find alternative suppliers or absorb skyrocketing energy costs” and will therefore “face significant disruptions. “
“Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.”
The US Chamber of Commerce was rather more blunt.
In a statement titled, Tariffs Are Not the Answer, the org’s senior veep John Murphy wrote: “The President is right to focus on major problems like our broken border and the scourge of fentanyl, but the imposition of tariffs … won’t solve these problems, and will only raise prices for American families and upend supply chains.”
The National Retail Federation responded to the taxes with support for the Trump administration’s efforts to make international trade more fair, but also opined that: “Imposing steep tariffs on three of our closest trading partners is a serious step,” and called for “solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.”
Counter-tariffs on the way
The nations subject to the tariffs aren’t happy.
Canada announced 25 percent import tariffs of its own covering on American goods including spirits and peanut butter that mostly come from US states where Trump’s Republican Party holds power.
Mexico pointed to recent efforts to control illegal drug imports, claimed the USA has armed drug gangs, and called for talks rather than tariffs.
President Claudia Sheinbaum Pardo also made pointed remarks about the USA’s faltering efforts to address drug use.
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China took a similar tack, as a foreign ministry spokesperson pointed to its efforts to stop the flow of drugs and the chemicals needed to make them. The spokesperson also opined: “The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes.”
The Middle Kingdom believes the import tariffs are illegal under World Trade Organization rules.
“The US needs to view and solve its own fentanyl issue in an objective and rational way instead of threatening other countries with arbitrary tariff hikes,” the spokesperson wrote.
Tariff help for Big Tech next?
Trump has also suggested he may impose tariffs on the European Union, an act that Tom Wheeler, a visiting fellow at research org the Brookings Institution last week suggested could be used to push back against Europe’s many regulations on the activities of big tech companies.
Facebook CEO Mark Zuckerberg, who bent over backwards for Trump following his reelection, is all for this, expressing earlier a desire to “push back against foreign governments going after American companies to censor more.”
As it happens, on Sunday the President of the European Council António Costa and Canadian Prime Minister Justin Trudeau had a chat.
Canada’s readout of the conversation states that Trudeau “discussed the imposition of US tariffs and Canada’s response.”
After he did so, “The leaders underscored the importance of continued co-operation to promote security and economic prosperity for people on both sides of the Atlantic.”
Which is pretty much what the US industry lobby groups quoted above also want. ®
Updated to add at 1720 UTC
President Trump has paused his 25 percent tariff on goods imported from Mexico for one month after Mexican President Claudia Sheinbaum agreed to continue sending soldiers to the border to tackle the smuggling of fentanyl and other drugs.
Trump still intends to slap full-fat import levies on foreign-made chips as well as imported oil and gas, for now.
Updated to add at 2215 UTC
The US tax on Canadian imports has been put back at least a month following a conversation between President Trump and Canadian Prime Minister Justin Trudeau. "Proposed tariffs will be paused for at least 30 days while we work together," the prime minister tweeted.
We assume that means Canada's retaliatory levies are also on hold. Trudeau also said his nation will continue its efforts to police the US-Canada border from organized crime and fentanyl trafficking.