Trump’s Tariff Policy: U.S. Certain to Suffer Its Own Major Blow

Editorial

17:13 JST, December 1, 2024

U.S. President-elect Donald Trump, who touted on the campaign trail a policy of imposing higher tariffs, has unveiled a specific tariff strategy for the first time since his presidential election victory. It is crucial for the countries concerned to respond while ascertaining his true intent.

On Nov. 25, Trump announced a plan to impose an additional 10% tariff on imports from China and slap 25% tariffs on goods from Mexico and Canada.

As a reason for the move, he said that fentanyl, a synthetic opioid for which precursor substances are manufactured in China, has entered the United States via Mexico.

During his first term in office, Trump imposed 25% tariffs on many Chinese products, and these tariffs remain in place. He said additional tariffs would be imposed until the drug issue is brought under control.

As to Mexico and Canada, Trump has claimed that the influx of illegal immigrants from these countries has brought crime and drugs into the United States. He said he would sign an executive order when he takes office on Jan. 20 next year.

There have been strong concerns about Trump, who takes an “America First” approach, disregarding multilateral frameworks and trying to gain benefits through bilateral deals.

On Nov. 27, Trump talked on the phone with Mexican President Claudia Sheinbaum and discussed issues such as illegal immigration. On Nov. 29, he reportedly met with Canadian Prime Minister Justin Trudeau, who was visiting the United States.

Are the new tariffs mainly aimed at getting these countries to take action against illegal immigration and drugs? Are they Trump’s first step toward reducing the U.S. trade deficit and rekindling the domestic manufacturing industry?

Trump’s repetition of certain words and actions, which look as if they were meant to confuse opponents, may be part of his negotiation tactics. The countries concerned need to carefully discern his true intent.

The new tariffs target the United States’ top three trading partners — Canada and Mexico, with which Washington has signed free trade agreements, and also China, with which the United States has an antagonistic relationship.

If the tariffs are imposed as planned, they will disrupt supply chains and cause enormous adverse effects. They could also lead to a contraction of trade and job losses. If they are passed on as higher prices, low-income earners in the United States, who are already struggling with inflation, will likely suffer.

Japan is also expected to be hit hard by the higher tariffs as many Japanese companies, including Toyota Motor Corp., Nissan Motor Co. and parts manufacturers, have factories in Mexico and Canada, where production costs are lower than in the United States.

Major U.S. automakers, such as General Motors, have also established similar supply chains. U.S. companies may themselves be deeply worried.

Previously, Trump pledged to impose blanket 60% tariffs on imports from China and tariffs of 10% to 20% on products from other countries and regions. It is hoped that governments and companies around the world will share information on policy trends and issues, and continue to persistently urge Trump to exercise restraint.

(From The Yomiuri Shimbun, Dec. 1, 2024)