सिंहदरबार संवाददाता
Agency. US President Donald Trump on Thursday delayed some tariffs targeting Canada and Mexico, prompting Ottawa to halt a further wave of retaliatory measures and providing relief to companies and consumers after a rout in financial markets.
Stock markets plunged after Trump’s tariffs of up to 25 percent took effect on Tuesday, as economists warned that the sweeping tariffs could hurt US growth and raise inflation. Trump signed an order on Thursday to block new tariffs on goods from Canada and Mexico covered by the North American Free Trade Agreement. However, he dismissed suggestions that his decisions were linked to market volatility.
The delay, which will last until April 2, will provide relief to automakers. Parts often cross North American borders during production in the auto sector.
Washington initially announced a one-month exemption for autos coming through the United States-Mexico-Canada Agreement (USMCA) after talks with the ‘Big Three’ American automakers – Tesla, Ford and General Motors – in the wake of the coronavirus pandemic. About 62 percent of Canadian imports will still face new tariffs, according to a White House official. However, many of these energy products are taxed at a lower rate of 10 percent.
About half of imports from Mexico come through the USMCA. “The latest steps have made things very favorable for our American automakers,” Trump said Thursday.
Immediately after Trump’s decision, Canadian Finance Minister Dominic LeBlanc wrote on Twitter, “Our country will not be moving forward with the second round of tariffs on $125 billion worth of American products until April 2nd, while we work to eliminate all tariffs.”
Trump said the additional tariffs would come on April 2nd and would be “reciprocal in nature.” He had previously promised to impose reciprocal tariffs to address practices Washington considers unfair. Canadian and Mexican goods could still face tariffs at that time.
Trump also said he would not revise the sweeping tariffs on steel and aluminum imports that were set to take effect next week. Despite the new measures, U.S. stock markets fell again on Thursday.
Extraordinary progress –
Trump told reporters in the Oval Office on Thursday that he had a “very good conversation” with Mexican President Claudia Senbaum. He claimed there had been “tremendous progress” in both illegal immigration and drugs coming into the United States. Both were cited as reasons Washington has imposed tariffs on Mexico, Canada and China.
His remarks were in stark contrast to the strained relationship with Canadian Prime Minister Justin Trudeau. Trudeau said on Thursday that despite “disruptions in some areas,” Ottawa would remain in a trade war with Washington “for the foreseeable future.” “Our goal is to eliminate these tariffs, all tariffs,” he said.
Canada contributes less than 1 percent of the illicit U.S. supply of fentanyl, according to Canadian and U.S. government figures. Meanwhile, China has denied US accusations of its role in the fentanyl supply chain and instead praised its cooperation with Washington on the issue.
“The United States should not reciprocate kindness with anger, and stop imposing tariffs without reason,” Chinese Foreign Minister Wang Yi said in Beijing. “China-US economic and trade relations are mutual. If you choose to cooperate, you can achieve mutually beneficial and win-win results. If you just use pressure, China will resist strongly.’
Economic Reality –
Scott Lincicombe, vice president for general economics at the Cato Institute, said Trump’s decision to lower tariffs was an “acknowledgement of economic reality.” Tariffs disrupt supply chains and the burden falls primarily on Americans.
“The market doesn’t like them and certainly doesn’t like the uncertainty around them,” he said. Since taking office for his second term in January, Trump has threatened tariffs on allies and opponents alike.
U.S. Treasury Secretary Scott Besant said Thursday he was not concerned that Trump’s tariffs would cause inflation, saying any impact on prices would likely be temporary. Trump has cited tariffs as a source of revenue for the U.S. government and a way to correct trade imbalances.
The U.S. trade deficit hit a new record in January. The trade deficit widened 34 percent to $131.4 billion as imports surged. Analysts said the deficit was likely fueled by gold imports, but the data also suggests businesses were trying to get ahead of tariffs.
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