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Tariffs

Trump's Tariff-Centred Economy: A Shakedown for Exporting Countries

Strategic Insights

— 2 min read

The Trump administration's trade strategy has come into focus this week, with countries like Japan and the European Union agreeing to baseline tariffs in exchange for access to the US market. This approach is seen as a coercive tactic, where countries are forced to swallow punitive trade terms or risk being hit with higher tariffs. The 15-per-cent tariff agreed upon by Japan will apply to various goods, including cars, while the EU is poised to sign a similar deal.

Key Takeaways:

  • The Trump administration's tariff-centred economy has come into focus, with countries being forced to agree to baseline tariffs in exchange for access to the US market.
  • Japan has agreed to a 15-per-cent tariff on its exports to the US, which will apply to various goods, including cars.
  • The European Union is poised to sign a similar deal, with a 15-per-cent tariff on certain goods.
  • Canada has limited clout in negotiations with the US, but holds some leverage due to its importance as a market for 36 American states.
  • The US economy is expected to feel the effects of these tariffs, with U.S. companies paying $300 billion by the end of the year.
  • Raising the national debt and increasing federal borrowing costs could slow growth in the coming years.
  • Mr. Trump's efforts to force the Federal Reserve to lower interest rates could make inflation worse.
  • Eliminating internal trade barriers and diversifying trade alliances are crucial for Canada's economic future.

Statistics:

  • The total amount expected to be taken out of the pockets of American businesses by the end of the year is $300 billion.
  • The amount already taken out of American businesses is $100 billion.
  • The 15-per-cent tariff will apply to Japanese cars and various other goods.
  • 36 American states rely on Canada as their main export market.
  • The states of New York, Pennsylvania, and Ohio are major economies within the US and have a powerful voice in Congress.
  • The bipartisan push in Washington to stop Mr. Trump from targeting Canada with abusive tariffs includes Republican and Democrat Congress members.

Sources:

  • Japan agreeing to 15-per-cent tariff on exports (no date provided)
  • European Union poised to sign similar deal (no date provided)
  • US$100 billion taken out of American businesses (Source: The Globe and Mail, no date provided)
  • US$300 billion expected to be taken out of American businesses by the end of the year (Source: The Globe and Mail, no date provided)
  • Japanese cars hit with 15-per-cent tariff (no date provided)

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