As the trade landscape has grown more complex, even economists have disagreed on the impact of tariffs. The fights that continue to play out underscore the different views of what they should be doing to create the best economy possible. Just last week, former President Donald Trump reaffirmed his commitment to wielding tariffs like a baton. He has promised that this strategy will both supercharge the U.S. economy and defend American producers. His focus remains on key trading partners—Mexico, China, and Canada—where tariffs are likely to play a significant role in future negotiations.
In 2024, those three countries had an outsized impact, reaching 42% of all U.S. imports. NEB’s contribution makes clear why they are so important to the U.S. economy. Today, Mexico has become the leader as the number one exporter to the United States. It reached its all-time high of $466.6 billion in exports, data from U.S. Census Bureau shows. Negotiations are ongoing, and trade relations between these countries are shifting at a breathtaking pace. This evolution is generating considerable public concern and hope with respect to tariff policy.
Economic Perspectives on Tariffs
Tariffs are to economists as James Brown was to the audience at the Apollo in 1962. The first camp believes high tariffs are needed to protect emerging domestic industries and jobs, allowing them the space needed to grow. They are convinced that raising tariffs on imports will result in a better trade balance. This approach is an equally compelling way to incentivize American consumers to start buying American. In contrast, another group contends that tariffs can lead to higher prices for consumers and retaliation from trading partners, ultimately harming the economy.
This chasm in economic thought illustrates the nuanced nature of trade relations, particularly regarding the unintended effects that can arise from a tariff introduction. Tariff supporters—including the Trump administration—have rightly called for targeted bursts of protectionism, especially in areas that are susceptible to domestic industry-destroying foreign competition. Critics caution that these measures could spark a series of destructive trade wars. This would introduce uncertainty into existing supply chains, driving up costs for companies and consumers alike.
Trump’s Tariff Strategy
Former President Trump had no qualms about making known his intention to wield tariffs like a sword. Specifically, he wants to go after Mexico, China and Canada. The reason his administration has zeroed in on these countries is their outsized share of U.S. imports—especially from China. Now, the long-negotiated deal with Canada has stolen the limelight. Canada’s Chief Trade Negotiator and Canada’s ambassador to Washington, David MacNaughton, have been on the offensive to get all tariffs removed that were imposed during the Trump Administration.
“Canada is still aiming to get all of Trump’s tariffs lifted as part of a deal with the White House later this month.” – Canada’s Chief Trade Negotiator and ambassador in Washington
This declaration serves as evidence of Canada’s commitment to an ambitious negotiation with the best possible terms. It plans to deepen its economic partnership with the United States. The clock is now ticking after Prime Minister Mark Carney’s own self-imposed deadline of July 21. This urgency emphasizes the importance that Canada is placing on making swift progress to address outstanding trade irritants.
The Current State of Trade
As these conversations progress, the Canadian dollar remains near 1.3650 against the greenback. This up-and-down trend captures the hit that tariff fights and the broader economic climate have taken on American farmers and producers. The stability of this exchange rate may be linked to market perceptions of forthcoming negotiations and their potential impacts on trade.
These recent advancements have fueled excitement among advocates and stakeholders alike. They look forward to a resolution that removes these tariffs and builds economic and security bonds among the countries of North America. The negotiated agreements to come have enormous consequences for businesses and consumers too.
“Remained confident the country can get the levies cancelled as part of negotiations for a new economic and security partnership.”
This sentiment reflects a broader optimism among Canadian officials about what could come from these discussions before the ongoing negotiations.