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"Slapping tariffs on the U.S.’ neighbors, friends, and leading trade partners is a major step backward"

U.S. President Donald Trump announced steep tariffs on imports from Canada, Mexico, and China, citing concerns over illegal immigration and drug trafficking. The tariffs, set to take effect on Tuesday, include a 25% levy on Canadian and Mexican imports and a 10% tax on Chinese goods. Canadian energy faces a lower 10% tariff. Trump's tariffs threaten to disrupt the $1.6 trillion trade between Canada, Mexico, and the U.S. each year.

The tariffs are to blow up the United States-Mexico-Canada Agreement (USMCA), which entered into force on July 1, 2020. There is no exception for fresh produce in the proposed new tariffs. In 2023, Mexico and Canada supplied 51 percent and 2 percent, respectively, of U.S. fresh fruit imports, and 69 percent and 20 percent, respectively, of U.S. fresh vegetable imports in terms of value. Mexico and Canada account for nearly half of U.S. agricultural imports, including two-thirds of vegetable imports.

"The Border Trade Alliance cheered when, during his first term, President Trump passed the United States-Mexico-Canada Agreement, which brought U.S. trade policy into the 21st Century and solidified North America's position as the globe's most economically competitive trading bloc", said BTA Chairman Pete Sepulveda, Jr., of the Border Trade Alliance.

"Slapping tariffs on the U.S.' neighbors, friends, and leading trade partners is a major step backward. Tariffs will force domestic prices upward, undermining the president's goal of getting inflation under control, and they risk goods marked 'Made in the USA' being hit with retaliatory tariffs that will cost American jobs", added Border Trade Alliance President Ms. Britton Mullen.

Despite Trump's pledge to lower costs for American consumers, economists and food industry executives warn the tariffs on Canadian and Mexican imports are expected to worsen U.S. food inflation, particularly for meat, vegetables, and fruit. With beef prices already near record highs and egg costs rising due to bird flu outbreaks, additional tariffs will further strain household budgets. The National Grocers Association criticized the move, calling it a "food tax" on consumers. Since tariffs are paid by importers, the costs will likely be passed down through higher prices or lower business profits. "We import most of our fresh fruit and vegetables from Mexico and Canada so you will definitely see inflation on those products," said Rob Fox, an economist and director of CoBank's Knowledge Exchange, to Reuters. "These are products that are not easily replaced," he said. "I can't go out and plant tomatoes in Illinois in January and hope to replace them."

Source: Dreamstime

Retaliation
Canada, Mexico, and China have vowed swift retaliation. Canada will impose matching 25% tariffs on $106.6 billion worth of U.S. goods, including alcohol, household appliances, and sporting goods. Fruit and fruit juices, including orange juice from Trump's home state of Florida, will also be subject to the tariff. Mexico is preparing countermeasures, with Mexican President Claudia Sheinbaum rejecting U.S. claims that her government is aligned with drug cartels. China condemned the move but has yet to specify its response.

Economists warn that escalating tariffs could trigger a global trade war, raising prices on goods such as cars, steel, lumber, food, and housing. U.S. industry groups, including automakers and farmers, fear severe economic repercussions. The car manufacturing sector, which relies on cross-border supply chains, may see vehicle prices increase by $3,000 per car. Housing costs could also rise due to tariffs on building materials.

Trump justified the tariffs under the International Emergency Economic Powers Act, blaming China for fentanyl exports and Mexico for cartel-driven drug trafficking. He suggested that the tariffs would remain in place until Canada and Mexico enhance border security cooperation.

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