As the presidential election approaches in November 2024, former President Donald Trump is making headlines with his renewed focus on tariffs as a means to bolster the US economy and support American producers. This strategy comes at a time when Mexico, China, and Canada accounted for 42% of total US imports by 2024. This extreme scenario highlights exactly what’s at stake for our trade relations abroad.
To say that the US Census Bureau was surprised on February 5 when Mexico became the United States’ largest exporter in 2024 would be an understatement. Its imports were extensive at $374.7 billion. This impressive number underscores Mexico’s critical role in the US import landscape. More importantly, it raises deeper questions about the impacts of new tariff policies on this critical economic relationship.
Trump’s Tariff Intentions
Protectionism through tariffs is Trump’s plan to save American manufacturers. He too, like President Obama, wants to alter the trade dynamics with our key partners. We know his focus will be foremost on Mexico, China and Canada because he has stated that. This push aligns with his overall plan to appease voters by increasing domestic production and making them less reliant on foreign goods.
In fact, during his 2016 campaign, Trump made no bones about his optimism that these tariffs would do nothing but reinvigorate the American economy. His thinking is that if we force these financial disincentives on all imports, American producers will have a more level playing field in which to compete. Though the specifics of how these retaliatory tariffs would be enacted are left ambiguous.
Trade Agreement Under Threat
European Union officials are pushing back against new US demands for concessions. Taken together, this could help usher in unprecedented change in our trade policy. EU officials are alarmed by these demands. They view them as “maximalist,” meaning that the concessions they would need to agree to might have to be massive.
Those privy to the deal are cautioning that these demands could put at risk a recent trade agreement struck by Trump. This treaty was meant to further facilitate free and open trade. These changes would result in increased friction between the EU and the US, making an already complex trade scenario even more complicated and tense.
“EU officials view the requests as maximalist and the concessions as significant.” – People familiar with the matter
Implications for US Imports
Those figures underscore how vital our neighbors Mexico, China, and Canada are in the supply chain creating more affordable goods for American consumers. In fact, forty-two percent of all US imports come from these countries. Implementing tariffs would increase prices for consumers and damage our relationships with these important trading partners.
The stakes of Trump’s tariff intentions go beyond the economic impacts. They also impact our diplomatic relations. The challenge of protecting American jobs while keeping important trade relations with our neighbors to the north and south should be a careful balance.