Trump exerts us power with unclear financial consequences

President Trump burns the US economy as a weapon and puts more than a billion dollar on the line when he opens economic wars on several fronts.

He has threatened tariffs for the United States’ closest trading partners who are responsible for more than 40 percent of US imports to try to force them to accede to his demands. Mr. Trump is pushing Canada, Mexico and China to stop streaming migrants at the border – one of his biggest domestic political issues – as well as to stem the shipments of deadly drugs and offer the united states better conditions when it comes to trade conditions.

On Monday, Mexico earned a slight postponement after Trump agreed to expose customs 25 percent – which should come into force on Tuesday – for a month. This decision came after President Claudia Sheinbaum of Mexico promised to strengthen the US -Mexico border with 10,000 members of its National Guard.

But Mr. On Monday, Trump made it clear that he would use tariffs liberally to get other governments to give him what he wants, and essentially to say that he would exploit America’s financial strength to bully other nations.

“I don’t want to use names, but duty is very powerful, both financially and by getting everything else you want,” said Mr. Trump under comments in Oval Office. “When you are the gold pot, the tariffs are very good, they are very powerful and they will make our country very rich again.”

The president is right that the US economy is a powerful weapon and that a trade war would hit other countries harder. In particular, Canada and Mexico are deeply dependent on trade in the United States. They send more than 80 percent of their exports to the United States and could be paralyzed by a long -lasting battle.

But many economists say the strategy will also cost the United States. They estimate that trade war as strong as the US economy is that trade war will weaken it by raising prices, stopping investments, waking growth and dragging exports down. Many farmers and businesses that would see their costs rise and the export markets evaporate have protested the risk.

Even if the president ultimately does not follow duties, the uncertainty his policies can create can discourage companies from investing in new factories and hiring workers until they have a clearer picture of how trade will unfold.

Emily Blanchard, an economics professor at Dartmouths Tuck School of Business, argued that the customs threats would eat away by American financial leverage. She said that Mr. Trump “undermined the confidence that provides the basis of American strength” by throwing around the country’s emphasis on global markets.

If businesses and investors expect the United States that the United States regularly insert customs duties, they will uncover against future disruptions by reducing their dependence on US markets, she said. “Trade policy is an economic weapon that becomes less powerful every time it is used,” she said.

The president has briefly recognized that trade war could hurt Americans, but he has claimed they will hurt other countries more.

“Will there be some pain?” He wrote on social media on Sunday. “Yes, maybe (and maybe not!). But we will do America well again and it will all be worth the price to be paid. “

A news announcement that accompanies Mr. Trump’s Trade Director over the weekend, stated that access to the US market was a “privilege” for foreign governments. The White House noted that trade accounted for 73 percent of Mexico’s economic activity, 67 percent of Canadas and 37 percent of China’s. But trade is only 24 percent of us gross domestic product, it says.

Wendy Cutler, a former US trade dealer and vice president of the Asia community, said Mr. Trump was right that trade war would be more painful for Canada and Mexico. “There is no doubt that our partners will be more severely affected than the United States, with over three -quarters of their exports intended to our market,” she said.

“Still, American consumers, businesses and economics will also feel the pain, especially when we are subject to retaliation measures from our partners.”

Researchers at the Peterson Institute for International Economics in Washington have estimated that a duty of 25 percent In Canada and Mexico and a 10 percent duty in China, other countries hit the most difficult, but would also slow down the US economy.

Canadian and Mexican gross domestic product would both shrink by a full percentage point by 2027, they estimate. GDP in the US would only fall by approx. one -third of it. While it may not seem like much, there are few actions that US presidents have willingly taken this cut of economic growth with so much.

Tariffs on Canada and Mexico would be particularly painful because many companies after 30 years under a joint trade agreement have created supply chains crossing North American borders. Companies that make oil, cars, consumer care products, tequila, steel and other products have expressed concern about tariffs.

Ontario, the province, home to Canada’s automotive industry, estimates that 450,000 jobs are at risk due to tariffs. Officials announcing that they would offer tax deferrations and other measures to help companies affected by the tariffs.

In addition to the effects of businesses, trade experts said there could be long -term damage to US interests. This is because the customs threats would eat away by international confidence that the United States will comply with trade rules and norms that control when governments deploy tariffs and why.

Edward Alden, a trade expert in the Council for Foreign Relations, said the United States had cared for a system of international rules and predictability for decades. With Trump’s decision to move on with Customs this weekend in a “random, incomprehensible way,” he said, “That era has ended.”

“The United States is now signaling that duty is a club to be used for all the political goal the president wants,” he said. “This formula will create huge, in many ways unprecedented, uncertainty not only in North America, but throughout the global economy.”

Canada and Mexico have been ready to reciprocate if customs come into force, despite a US threat to escalate tariffs further if they do. Canada announced on Sunday that it would target American -made honey, tomatoes, whiskey and refrigerators. Before one-month postponement, Mexico’s president had also said her country would answer.

Foreign officials have become frustrated that Mr. Trump’s measurements to have tariffs removed are subjective and vague. He has expanded his targets in recent days and said that countries also need to reduce their trade surplus with the United States, in addition to action on drugs and migrants.

Monday asked what Mr. Trudeau could offer the United States to prevent customs rates, Mr. Trump: “I don’t know. We have large deficits with Canada, as we do with all countries. “

Some have suggested that Mr. Trump’s real goal is to move the blame for domestic problems abroad.

Ms. Sheinbaum said in a social media post on Saturday that if the United States really wanted to tackle drug problems, it should look at internal measures. It could fight fentanyl sales on its streets, address money laundering or start a campaign to prevent drug consumption, she wrote.

Others have claimed that Mr. Trump’s motives may be more about sending political signals to his supporters instead of truly affecting drugs, migrants or trade.

Heather Hurlburt, a former Biden Administration Trade Members, said during an event at the Council for Foreign Relations in January that “signaling in politics” was the “only main purpose of customs duty.”

“This is a signal game,” she said.

Economic research published last year found that Mr. Trump’s tariffs in his first period had not achieved his declared goals of increasing the production jobs, but that they still had the benefit of the president politically by winning voters of the Republican Party.

Ms. Hurlburt said that after Mr. Trump’s first term “duly was noted across the political spectrum” that the tariffs had been incredibly effective in getting people to pay attention.

“If you want to signal to the public that you take on edition X, Y or Z, customs rates are now an irresistible way of doing it,” she said.