As the United States gets set for the 2024 presidential election, President Donald Trump is primed to leap. He wants to leverage tariffs as an offensive, strategic weapon to strengthen the U.S. economy and make American producers more competitive. These tariffs will be especially directed at our neighbors, Mexico and Canada, as well as our largest competitor, China. Together, they recently accounted for an alarming 42% of total U.S. imports in 2024, based on the latest data from the U.S. Census Bureau.
Through the first half of 2024, Mexico became the top overall exporter to the U.S., with $466.6 billion exports. That staggering number further highlights the important position that Mexico occupies within U.S. trade flows. As Trump gets ready to slap billions in Chinese tariffs, he wants to turn this unbalanced economic relationship to serve American interests.
Economic Implications of Tariffs
The use of tariffs has been the topic of huge contention in the field of economics. There are two main camps when it comes to their economic effects. One perspective argues that tariffs can effectively protect domestic industries and jobs by making imported goods more expensive, thus encouraging consumers to buy American products. On the one hand, as opponents will note, tariffs work by increasing prices for consumers. They further note that these measures can set off retaliation by trading partners, which, in the long run, hurts the economy.
As Trump moves forward with his tariff plans, it is evident that he is keenly aware of the potential electoral implications. With the presidential election nearing, he has recently shown his hand. His intent is clearly to leverage tariffs as a vote-winning wedge, particularly with his panic-stricken manufacturing voters who see their livelihoods under assault from foreign competition.
Japan’s Position in Bilateral Negotiations
Japan’s Trade Negotiator Ryosei Akazawa recently signaled an upbeat outlook for current bilateral negotiations with the U.S. He pointed to Japan’s interest in a favorable deal that would let it escape from tariffs applied across the board to other countries.
“Generally speaking, if we reach a deal it should secure special treatment for Japan, and exclude it from rules that apply to most countries,” – Ryosei Akazawa
Akazawa’s remarks indicate a long-term, smart strategy by Japan to position itself as a leader in the rapidly changing world of trade relations with the U.S. Japan’s overriding goal is protecting its economic interests. The biggest area of negotiations will probably be around preventing any new tariff from hitting Japanese exports greatly.
The Broader Trade Landscape
Tariffs are uniquely situated to meet today’s crises. Global supply chains are already stretched thin from geopolitical tensions and the warping effects of the COVID-19 pandemic. As countries worldwide reassess their trade policies, the U.S. moves toward a more protectionist approach could reshape international trade dynamics.
The Trump administration aims its trade efforts at Mexico, China, and Canada to help bring American manufacturing back home. This method answers worries about trade deficits. This approach needs to be carefully navigated to not incite country-specific backlash from impacted countries.