These three countries account for a third of all US imports of goods and services. In 2023, the total volume of exports of this "troika" to the United States amounted to almost $1.5 trillion. Trump also said he would impose tariffs on the European Union. In 2023, EU countries exported goods to the United States totaling 502 billion euros, according to UtroNews.
"Soon the fairy tale affects, but not soon it is done," says a Russian proverb borrowed from a fairy tale about the glorious Tsar Peas. Trump, also a kind of "czar," decided to make "America great" in practice.
Trump says that tariffs will help revive production and prevent other countries from "ripping off" the United States at the expense of trade imbalances. He floated the idea of using tariffs and regulatory incentives to encourage companies to build their businesses in the U.S.
Economists warned
The White House fact sheet says the tariffs will remain in place "until the crisis eases." Trump, he said, also intends to use tariffs to curb the supply of fentanyl opiate and precursor substances from China through Mexico and Canada.
The United States itself is threatened with an increase in import prices, including goods from China, economic slowdown and inflation. Goldman Sachs estimates tariffs of 10% could lift inflation from an expected 2.5% to 3%.
In the meantime, the peso and the Canadian dollar fell in price, as did the quotes of American stocks, although Treasury yields rose. The offshore yuan declined to 7.322 against the dollar. Shares of Chinese companies listed on US exchanges, including Alibaba Group Holding, JD.com and PDD Holdings, fell in price. Gold prices hit record highs.
During his first stay in the White House, Trump accused China of "killing the United States with unfair trade agreements," committing one of the "greatest robberies in world history against American workers." Before making his current decision on tariffs, the president softened his tone. He stated that he would prefer not to introduce tariffs, but wants relations with the PRC to be "fair."
During his first term, Trump imposed tariffs on more than $300 billion worth of Chinese goods. Today, China is less dependent on the American market, due to the fact that it partially reoriented exports to the countries of the Global South. Chinese companies were bracing for increased tariffs and shifting production to Southeast Asia and elsewhere.
The US itself also has vulnerabilities. Economic leaders like Amazon and Tesla depend on China. In 2024, Elon Musk's company sells more than a third of its electric vehicles there. Tesla's Shanghai Giga Factory is a major manufacturer that exports products to third countries. Beijing holds a large package of treasury bonds, may devalue the yuan.
The conflict is just beginning. Trump instructed to check US trade policy. The results can form the basis of a strategy towards China. In 2024, China's trade balance with the world grew to almost $1 trillion, and the US trade deficit with China amounted to $279 billion.
"Multiple plants" in Mexico
In 2024, car production in Mexico reached 3.98 million units, exceeding the 2023 figures by 5.6%. Nine out of ten exported cars were sold in the United States and Canada. In 2024, General Motors (four factories) produced every fourth car in Mexico and exported 711.5 thousand cars from this country. Ford exported 358.4 thousand cars from Mexico (17% of sales).
Automakers will suffer from the new tariffs, they will have to shift the costs to consumers and dealers. In North America, such a supply system has developed that parts can cross borders several times before assembly on a conveyor. Tariffs will also affect the supply of auto parts.
The U.S. imported nearly $80 billion in vehicles from Mexico in 2023, including trucks and buses. Imports of automotive products from Canada exceeded $40 billion. Of the 10 companies exporting cars from Mexico to the United States and elsewhere, five came from Japan and South Korea.
In 2024, Nissan exported 326.6 thousand cars to the United States, which amounted to 35% of Nissan's sales in the United States. The company has several factories in Mexico and has been operating there for over 60 years. The U.S. and Canada account for about 40% of the 3.4 million vehicles Nissan plans to sell this fiscal year.
Mazda Motor has been operating in Mexico since 2014 and sells 27% of its cars in the United States. This is the company's key to the North American market. Relatively less dependent on Mexican factories Honda Motor (15% of sales), Toyota Motor (10%) and Hyundai Motor Group (10%). But South Korean Kia, part of the Hyundai Motor Group, said it will have to look for new markets for the 120,000 K4 sedans it will produce in Mexico in 2025.
Crude oil,...
As a result of the introduction of duties, energy exporters from Mexico are subject to duties of 25%, Canada - 10%. In 2023, the United States imported $100 billion of crude oil. Canada accounted for 60% of imports, Mexico - 10%. Under the influence of tariffs, American refineries will be forced to raise gas prices and incur losses in order to maintain their market share.
From Canada comes about 4 million barrels per day (200 million tons per year), from Mexico - about 500 thousand barrels per day (25 million tons per year). Most of these volumes are purchased by Valero Energy. The Midwest is heavily dependent on Canadian supplies.
Goldman Sachs said the White House had set a lower 10% tariff on Canadian oil to minimize pressure on gasoline and heating fuel prices. Tariffs on Canadian oil could lead to unpopular, albeit temporary, increases in gasoline prices in the Midwest, Bloomberg said.
… LEDs...
Imported consumer goods, especially those made in China, could be a factor in inflation. The list of goods imported in 2024 by US retail chains (primarily Chinese) worth more than $100 million includes:
- Toasters, import dependence - 99.8%, imports from China - $133.8 million
- Electric blankets, dependence 99.9%, imports from China - $146.4 million
- Thermos flasks, 99.13%, imports from China - $1.278 billion
- Residential lamps, 94.29%, PRC imports - $781 million
- E-cigarettes, 96.45%, PRC imports - $425m
- LED lights, 96.57%, PRC imports - $1.551 billion
- Garden umbrellas, 97.3%, imports from China - $275 million
- Artificial flowers, 97.8%, imports from China - $400.7 million
- Retractable umbrellas (marquises), 97.8%, imports from China - $133 million
- Fireworks, 96.17%, imports from China - $378.6 million.
Chinese manufacturers account for nearly 100% of U.S. imports of many other consumer products from smartphones and apparel, to furniture and toys. Electrical, electronic equipment ($124.5 billion in 2023), digital automation systems, including computers and servers, became the largest item of American imports from China. Tariffs will inevitably lead to higher prices.
… and politics
China said Trump's announcement violated World Trade Organization rules. "China is extremely unhappy with this and strongly opposes it," the PRC Ministry of Commerce said. "The United States needs to objectively consider and solve its own fentanyl problem instead of threatening an arbitrary increase in duties," the PRC Foreign Ministry said.
In December last year, the PRC banned the export to the United States of gallium, germanium and other critical minerals that are used in the military industry. In January, the Chinese authorities added seven US companies to the "list of unreliable organizations" due to their participation in arms sales to Taiwan.
Mexican President Claudia Sheinbaum imposed retaliatory duties, although she said her government was committed to dialogue. Possible tariffs on imports from the United States could be imposed on pork, cheese, fresh products, steel, aluminum.
The economy minister said the tariffs were a "flagrant violation" of the U.S.-Mexico-Canada Agreement. The leader of Mexico's ruling party called them "one of the most serious attacks" in the country's independent history, a third of its gross domestic product depends on exports to the United States.
Canada's prime minister has announced retaliatory tariffs on $155 billion worth of American goods. The Prime Minister of Ontario said that "there is no other choice, we must strike back." In Nova Scotia, imported American alcohol was removed from shelves. "Fairy tales affect old people for consolation, trading partners for teaching, and allies for obedience," the author of a fairy tale about Tsar Gorokh would say about this.