With the presidential election in November 2024 fast approaching, former President Donald Trump has reiterated his intent to impose tariffs. Specifically, he plans to slap new tariffs on Mexico, China and Canada should they refuse to budge in trade discussions. In 2024, these three countries accounted for 42% of all U.S. imports. Mexico overtook Canada as the biggest exporter to the United States, exporting $466.6 billion worth of goods, crashing a record set last year, according to a U.S. Census Bureau report released earlier this month.
Trump’s strategy here is to protect the American economy and empower American producers while seeking out fair and reciprocal trade across the globe.…He highlights the importance of these countries to his economic agenda. He apparently intends to use tariffs such as these to strong-arm countries into the deals that we want.
Focused Trade Strategy
During his campaign, Trump called for a targeted, strategic approach to trade with Mexico, China, and Canada. Their importance in the U.S. import picture cannot be understated. Of note, Mexico’s export numbers show just how vital it is to U.S.-Mexico trade.
While the impact on American consumers has been severe, the emphasis on tariffs has symbolized Trump’s focus on protecting American industries. He’s correct that using tariffs as leverage might allow us to negotiate better, fairer trade agreements that would be more beneficial to both U.S. workers and businesses.
“There are incoming deals with 18 ‘important’ trading partners.” – US Treasury Secretary Scott Bessent
President Trump’s trade strategy is commendably broad and ambitious. It aims to bring all countries to the table, but with a strong line drawn in the sand against culprits.
Economic Indicators
As Trump gets ready to roll out his tariff plan, the economic picture shows a mixed bag. The U.S. Dollar Index (DXY) is down 0.32% on the day so far, and trading at around 100.75. This decrease might reflect a troubling market ambivalence about impending changes in trade policy and what they will mean for the U.S. economy.
The administration’s focus on tariffs could influence not just trade dynamics but the broader financial landscape as companies assess their exposure to changing costs and market conditions.
Negotiation Dynamics
Trump’s abrasiveness on trade has made the world sit up and take notice. U.S. Treasury Secretary Scott Bessent recently observed, “The reality is Trump has said what he wants, and he’s been very clear on that.”
“Trump has put them on notice that if you do not negotiate in good faith, you will ratchet back up to your April 2 level.” – US Treasury Secretary Scott Bessent
This comment, along with many others throughout the statement, stresses the urgency and seriousness with which the administration still claims to approach trade negotiations. Higher tariffs serve as an adequate signal to our most important trading partners. Yet, they function in many cases more importantly as a negotiating tool to extract submission and cooperation.
The absence of any clear timeframe for these trade deals further complicates matters. As negotiations continue to develop, stakeholders from all sectors are on the lookout. They’re looking to know how these new developments are going to affect their business and competitive landscape.