US President Donald Trump is personally and deeply committed to the idea that tariffs can be used to improve the American economy. Supporting domestic producers His intention behind the rulemaking efforts is to build up domestic producers in time for the presidential election, scheduled for November 2024. In particular, he laser-eyes critical trading partners such as Mexico, China and Canada. Combined, the two together made up 42 percent of all US imports in 2024.
Trump’s America First strategy is based on exploiting these mutual relationships to build an economic environment that is best for the United States. As he faces down re-election, tariffs form a cornerstone of his supposedly economic policies. Like Trump, his avowed goal is to protect American jobs and industries.
Focused Tariff Strategy
By 2024, Mexico indeed became the number one exporter to the U.S. According to the US Census Bureau, its exports reached an all-time high of $466.6 billion. Ironically, Trump’s own administration understands just how crucial our trading relationship with Mexico has become. Their strategy seems to be to introduce and then raise potential tariff increases to drive domestic manufacturing and import dependency diversion.
Together with Mexico, China and Canada are staying on Trump’s radar for now. Fortunately, the administration is on track to put in place more effective measures that could change the overall trade playing field with these countries. Trump is using these three countries as key negotiating partners to get better terms of trade. He intends to use these tariffs, among other things, to strengthen American manufacturing facilities.
EU Negotiations Under Scrutiny
While Trump’s attention is drawn towards North America and China, his administration is engaging with European Union counterparts regarding trade relations. US Trade Representative Jamieson Greer will raise these issues directly with his EU counterpart, Maros Sefcovic. Yet he thinks that the recent “explanatory note” released by the EU doesn’t really meet US expectations.
US negotiators are making aggressive unilateral demands of Brussels. They want to bring badly needed accountability to our trade practices and align them more closely with American interests. The Trump administration is silently seeking to further position itself in the ongoing dialogs to better its position in international trade negotiations. They are advocating for agreements that further US economic interests.
Economic Ramifications
These tariff hike announcements come at the very moment that the EUR/USD exchange rate has begun climbing back toward pre-trade-war levels. As of this writing, it is trading 0.33% higher on the day at 1.1318. This up and down has been the direct result of the market reacting to unpredictable trade negotiations and fuzzy notions about what Trump’s tariff plans would mean.
Trump’s war on economic implements, the favored weapon of manufacturing’s generals, has long elicited praise and disgust from all corners of the economy. Supporters claim that these types of measures are needed to protect American jobs and industries from unfair foreign competition. Critics repeatedly warned that hiking tariffs would only raise costs on American consumers. They similarly caution that new such requirements will test America’s sometimes-fragile relationships with key trading colleagues.