WASHINGTON: US President Donald Trump introduced sweeping tariffs this week on major trade partners Canada and Mexico, straining international relations before providing temporary relief to manufacturers. However, with additional tariffs set to take effect next week, the reprieve may be short-lived.
Starting Monday, US companies were hit with a series of duties, including a doubling of tariffs on certain Chinese goods. On Tuesday, 25% tariffs on Canadian and Mexican imports were implemented, further escalating tensions. These actions unsettled financial markets, causing significant declines in major Wall Street indices.
In a partial reversal, Trump announced exemptions on Thursday for Canadian and Mexican goods entering the US under the North American trade agreement. According to White House estimates, approximately half of Mexican goods will benefit from this exemption.
Philip Luck, director of the economics program at the Center for Strategic and International Studies (CSIS), described the initial tariffs as “economic kryptonite,” calling the policy “self-destructive.” While Trump scaled back some levies to account for the deeply interconnected North American auto supply chains, Luck noted that the initial imposition of tariffs has lasting repercussions.
### Steel and Aluminum Tariffs Loom
Looking ahead, Trump’s 25% tariffs on steel and aluminum imports are scheduled to take effect next Wednesday. The president has stated that these levies will not be adjusted.
These tariffs will impact Canada and Mexico, both significant steel exporters to the US, as well as other trading partners such as Brazil, South Korea, and European nations. While the measures aim to bolster domestic steel producers, experts caution that they could harm a wide range of other industries.
Luck of CSIS pointed out that steel and aluminum are critical inputs for sectors like construction, data centers, and automobile manufacturing. The broader economic impact of these tariffs remains uncertain, raising questions about whether they will ultimately do more harm than good.
