The United States has imposed new import taxes ranging from 10% to 50% on various goods entering the country, escalating tensions in international trade. One of the most impactful changes is the new, higher tariffs on goods imported from Canada. In the future, they’ll be subjected to a given tax rate of only 35%. For their part, President Donald Trump claims that Canada has not done enough to stop fentanyl and other drugs from entering the U.S. Consequently, this decision is the result of his allegations.
This increased tariff on Canadian imports is based on drug enforcement fears. The U.S. government claims that Canada has failed to cooperate in curbing the influx of fentanyl, a potent synthetic opioid linked to numerous overdose deaths in the U.S. While this assertion may seem reasonable at first glance, the facts show that Canada is responsible for less than 1% of all fentanyl entering the United States.
In light of these challenges to public health and safety, Canada is moving quickly to crack down on drug trafficking. The Canadian government has made “historic investments” to fight drug cartels. To achieve this they propose hiring as many as 15,000 new police, immigration and border patrol agents.
The new tariffs are a reality, but we have some encouraging news to share! The United States-Mexico-Canada Agreement (USMCA) mostly protects Canadian products from these import tariffs. This bilateral free trade agreement has kept almost 90% of Canadian imports into the U.S. exempt from tariffs.
The ramifications of these tariffs go well beyond just Canada. India has been slapped with a massive 25% tariff rate due to its trade with Russia. In addition, the country will face an as-yet unspecified penalty. Taiwan, which had the highest initial tariff of 32% in April, will now start at a 20% tariff. South Korea successfully negotiated a 15% tariff on its imports in exchange for making investments in the U.S. and other concessions.
Switzerland in particular would hit a high hummocky tariff rate of 39%. At the same time, Laos, a small, land-locked country in southeast Asia, is suffering one of the highest tariff rates in this round.
So far, the U.S. administration has been able to reach agreements with eight trade partners. These are home to major economies such as the UK, China, Japan, and the European Union. It was in these negotiations that we first set tariff ceilings. In return, our companies got commitments on investment within the U.S. and other concessions.
For the majority of countries impacted by these tariffs, this seven-day period will evaporate before they can react. From then on, the new rates will go into effect. Any goods loaded onto ships by August 7 will not be subject to the new rates. If they make it to U.S. shores before the 5th of October, new home, the changes don’t apply to them.
Economic analysts have unmercifully panned the decision and forewarned against the fallout of these disastrous tariffs. Other economists claim that raising tariffs would harm consumers through higher prices and would sour relations between international trading partners.
“There are markets beyond the United States.” – Ng
Supporters of the Trump administration’s actions claim that they’ll do things like protect American jobs and support the kind of economic growth we all want. According to Karoline Leavitt, a spokesperson for the administration, “What we are watching is President Trump rebuilding the greatest economy in the history of the world.”