Donald Trump’s promise to enact tariffs on Mexico and Canada, America’s primary trading partners, will disrupt the flow of the North American economy and raise the prices of everyday goods.
Trump threatened the United States-Mexico-Canada Agreement with 25% across-the-board tariffs on his first day in office in protest of their roles in migration and the illegal fentanyl trade.
The president-elect claimed that his trade escalation wouldn’t impact consumer prices, but Newsweek noted that most economists disagree, saying that tariffs get passed on in the form of higher prices for consumers since foreign sellers tend to raise the cost of their goods to offset the tariffs they would have to pay to the U.S. Department of Treasury.
Ultimately, consumers will bear the brunt of Trump’s tariffs. This is bad news for the Americans straining to keep up with the already high prices brought about by inflation.
Trump’s extreme promise was met with equal fervor by Mexico’s President Claudia Sheinbaum, who vowed to reciprocate any tariff imposed.
After a call with Trump, Sheinbaum stated that Mexico’s strategy is not to close borders, but to build bridges and the U.S. will face consequences if Trump implements the tariffs.
It is important to keep a good trading relationship with Mexico.
Last year, Mexico was America’s largest trading partner, exchanging $798 billion in goods and services, primarily in the automotive, plastics, machinery, electronic, aluminum and steel industries. Since the U.S. trade market relies heavily on its trading partners in Mexico, the impacts on the price of goods will be inevitable.
The U.S. is neither a lone economy nor a lone market. Trump must maintain these well-established North American trading relationships instead of upending them with another trade war, so he can truthfully deliver his campaign promise to “fix” the economy that so many Americans are dissatisfied with.