On Monday night, President-elect Donald Trump sent this out via Truth Social:
A 25% tariff on Mexico and Canada?! Big deal! (Trump, in a subsequent, er, Truth, said he would impose a 10% tariff on China as well.)
If Trump goes through with this pledge against the America’s three biggest importers, it would have colossal economic impacts. While the average person likely has no idea how tariffs work, here’s the simplest explanation:
Trump charges foreign companies/countries more to bring goods into the U.S.
Importers raise prices in order to keep making the same profits
Those price increases get passed down to American consumers.
And that’s not even getting into the possibility of retaliatory tariffs on American goods imported into other countries — and a trade war!
In August, the Peterson Institute for International Economics, a nonpartisan group, concluded that the tariffs proposed by Trump on the campaign trail would cost the average American family $2,600 a year (and would be even more costly for poorer families).
Trump, at some level, knows this. And he also knows that making things that people buy every day or every week more expensive is terrible politics.
Which brings me to this question: Is Trump actually serious about these tariffs?
Start here: Trump views all of life as a negotiation. And most of what he does is aimed at positioning himself to be in a better bargaining position.
That he announced these planned tariffs almost two months before he actually could institute them strikes me as important — and a sign that this may well be more a negotiating tactic than a set-in-stone plan.
Trump is signaling that he is serious to these three countries in hopes, I think, that it brings them to the table on other issues — most notably undocumented immigrants and drugs entering the U.S.
Of course, how Canada, Mexico and China react remains to be seen. They are their own independent actors and may not like being bullied by the soon-to-be president.
It’s an early test of Trump’s belief that everything is up for debate and compromise. And that he, uniquely, can make the best deals for the U.S.
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