U.S. tariffs put global trade in check

February 5, 2025

The new U.S. tariffs imposed on Mexico, Canada and China could unleash a global trade war with unforeseeable consequences.

U.S. tariffs, bill, dollars, Más Colombia

During his campaign Trump assured that he would make the United States stronger than ever and in the commercial field his main weapon will be tariffs which according to him is the most beautiful word in the dictionary.

The government of Donald Trump has imposed tariffs of 25% on Mexico and Canada and 10% on imports from China. For now, Mexican President Claudia Sheinbaum announced that an agreement has been reached and that the tariffs will be suspended for one month, however, it is not certain that after that time they will expire.

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Tariffs on Mexico a neighbor perceived as a threat

Mexico and the United States have a voluminous trade exchange that approaches US $750 billion, but in 2024 the US trade deficit in this exchange reached US $157 billion.

Mexico’s proximity to the United States, their extensive common border, the existence of a free trade agreement between the two countries and the much lower value of Mexican labor have led numerous US companies, but also from other countries, to move to the Aztec country to export from there.

Trump accuses Mexico of exporting fentanyl, of carrying thousands of criminals, of being allied with drug cartels and of receiving huge subsidies through trade.

Mexican President Claudia Sheimbaun announced an agreement with Donald Trump postponing for one month the tariffs announced by the US president. The agreements include a reinforcement of the border by Mexico to prevent drug trafficking, the commitment of the United States to prevent the trafficking of high-powered weapons into Mexico, and joint work on security and trade issues.

Although both López Obrador and Sheimbaun have adopted measures to reduce the flow of migrants, the new tariffs that ostensibly violate the free trade agreement with the United States and Canada, T-MEC, will be implemented affecting the Mexican economy as a whole, 80% of whose exports go to the United States.

Mexico’s exports to the United States are mainly vehicle parts, petroleum and machinery, but also food products such as beer, tequila, fruits, avocados, meat and tomatoes, which total more than US$21 billion and are widely consumed in the United States, and the new tariffs will increase consumer prices and thus inflation.

industrial development of mexico, Mexico, map, trade, industry, economy, Más Colombia

Canada’s vital fuel supply a victim of new tariffs

U.S. trade with Canada exceeds $900 billion and the U.S. has a trade deficit of at least $41 billion annually which is just a fraction of the huge U.S. deficit of over $1 billion.

Canadian exports to the United States are concentrated in fuels, minerals and agricultural products.

Trump has proposed that Canada become a new state of the American union which has provoked a general rejection in that country and its Prime Minister announced a forceful response which first of all means the imposition of a 25% tariff on US $ 155 billion of imports from the United States.

U.S. tariffs, banknote, dollars, US flag, Más Colombia

You may also read: Donald Trump expressed in a press conference intentions to take Greenland, the Panama Canal and rename the Gulf of Mexico

Tariffs on China: the dispute is at a different cost

With China the situation is more complex as the US deficit in 2024 reached almost US $300 billion constituting one third of the US deficit and China supplies a huge amount of industrial goods and equipment, agricultural products and minerals. The United States sells to China mainly soybeans, crude oil, gas, integrated circuits and medicines.

The imposition of tariffs on China has been slower than announced during the election campaign, but China also announced strong countermeasures, including lawsuits before the World Trade Organization.

U.S.-China trade war, flags, Más Colombia

The trade confrontation with these three countries that occupy an important place in the world economy, in the energy supply and in the manufacturing industry, represent a threat to the United States not only in terms of inflation but also in terms of breaking the supply chains that articulate the entire U.S. industry.

Trump is, in a way, unleashing a global trade war, since he has also threatened Europe and all the countries with which the United States has a trade deficit, but in the event that it does not have a deficit, he threatens to use his commercial force to pressure changes in the policies of various States.