US partners warn of trade war over Trump tariffs
Officials from Mexico, Canada and China and major industry groups warned that US President-elect Donald Trump’s threat of hefty tariffs on goods would harm the economies of all involved, cause inflation to spike and damage job markets.
Trump’s pledge announced on Monday roiled currency, bond and equity markets on Tuesday, as the three countries are the United States’ largest trading partners.
Mexico and Canada are particularly intertwined in US auto production and energy output thanks to decades of trade agreements between the North American neighbors.
Trump’s plan to impose a 25-percent tariff on Canadian and Mexican imports on his first day in office does not exempt crude oil as industry executives had hoped, two sources familiar with the plan told Reuters on Tuesday.
Leaders and other top officials warned a trade war could erupt and economies be damaged, and sought talks with Trump after the surprise announcement, which includes an extra 10 percent levy on Chinese goods—until the three countries clamp down on the flow of illicit drugs and migrant border crossings.
President Claudia Sheinbaum has suggested Mexico could retaliate with tariffs of its own.
Tariff war
“One tariff would be followed by another in response, and so on until we put at risk common businesses,” Sheinbaum said, referring to US automakers that have plants on both sides of the border.
A Bank of Canada official said any move by Trump to deliver on the threat would reverberate on both sides of the US northern border.
“What happens in the United States has a big impact on us, and something like this would clearly have an impact on both economies,” deputy Gov. Rhys Mendes told audience members at an event in Charlottetown, Prince Edward Island.
Earlier, a spokesperson for China’s embassy in Washington said: “No one will win a trade war or a tariff war.”
The three countries shipped a total of more than $1 trillion of goods to the United States in the first nine months of the year, led by Mexico and followed by China and then Canada, according to US Commerce Department data as of September.
Tariffs are paid by the companies that import goods and often passed to consumers.
