U.S. Decision to Impose High Tariffs: Don’t Allow Trade Wars to Expand

Editorial

17:40 JST, February 3, 2025

U.S. President Donald Trump has decided to implement his high-tariff policy and opened the door to trade wars. This is a grave situation that will damage the world economy and the international order. Ways to resolve the situation should be sought quickly.

Trump on Saturday signed an executive order imposing 25% tariffs on all imports from Canada and Mexico and a 10% additional tariff on goods from China. The order comes into effect on Tuesday. He limited tariffs on Canadian crude oil and other imports to 10% to contain price surges in the United States.

Trump, who has called himself “Tariff Man,” has finally delivered his high-tariff policy.

The tariffs are being enacted under the International Emergency Economic Powers Act (IEEPA), and Trump has declared a “national emergency” over the flow into the United States of illegal immigrants, synthetic narcotics for which raw materials are produced in China, and others. It is said he will keep the tariffs in place until he can get cooperation from the targeted countries on anti-drug measures and border security.

Using tariffs to make deals and achieve other policy objectives is no different from China’s economic coercion, and it should not be tolerated. It is also clearly contrary to the principles of free trade.

Threats will instead make other countries more resistant and less cooperative.

The United States has a free trade agreement with Mexico, its largest source of imports, and Canada, its third largest. China is in second place. The value of imports from each of these countries surpasses $400 billion (about ¥62 trillion) a year. There are fears that the global economy will suffer great damage as the United States, the driving force of that economy, targets its three major trading partners.

Following the North American Free Trade Agreement (NAFTA), which came into effect in 1994, the United States developed a close relationship with Canada and Mexico while later updating to a new accord, but now the supply chains running through these countries will unavoidably be disrupted, and production costs will rise.

These effects will also be felt in the United States, where inflation will undoubtedly accelerate. Trump needs to take a hard look at the pain in store for the people of the United States.

In response to the tariffs, Canadian Prime Minister Justin Trudeau has announced that his country will phase in 25% retaliatory tariffs on 155 billion Canadian dollars (about ¥16.5 trillion) worth of U.S. goods. Mexico and China will also reportedly take countermeasures.

Trump’s executive order states that the United States may raise tariffs further in response to retaliatory measures. The situation must not be allowed to escalate.

The impact on Japan will also be significant. Japan’s automobile industry in particular, including Toyota Motor Corp., has built a high-level supply network that spans countries including Canada, the United States and Mexico. The U.S. auto industry will also share in the downsides of the tariffs.

Prime Minister Shigeru Ishiba plans to visit the United States and meet with Trump on Friday. It is urged that Ishiba will point out the problems with high tariffs and help bring about a swift lifting of the measures.

(From The Yomiuri Shimbun, Feb. 3, 2025)