TRADETrump’s Risky New Era of Broken Trade Norms
For many decades now, the international economy has been backstopped by a reasonably predictable set of rules, led by a United States that believed it had a strong national interest in nurturing that sort of predictability. With President Donald Trump’s decision over the week to declare a specious “emergency” for the purpose of slapping crippling tariffs on his continental neighbors, that era has come to an end.
For many decades now, the international economy has been backstopped by a reasonably predictable set of rules, led by a United States that believed it had a strong national interest in nurturing that sort of predictability. With President Donald Trump’s decision over the week to declare a specious “emergency” for the purpose of slapping crippling tariffs on his continental neighbors, that era has come to an end. What follows now is, well, hard to predict.
Trump’s signature accomplishment in his first term was to renegotiate the rules of trade in North America, creating what Canada and Mexico believed would be a solid foundation for their economies for the next generation. Each of those two countries has built its economy around exports to its larger neighbor. As my CFR colleague Shannon K. O’Neil has argued, the closely knit supply chains in North America are not just beneficial for those smaller economies, they are the foundation of competitiveness across the region.
Yet the United States will now impose, starting Tuesday, tariffs of 25 percent against most Canadian and Mexican goods; in a small sop to the politically sympathetic Canadian province of Alberta, and to U.S. gasoline buyers, the tariffs on oil and other energy exports will be limited to 10 percent. China, which Trump had threatened during his campaign with tariffs as high as 60 percent, was also hit with new 10 percent tariffs on top of the existing ones from Trump’s first term, which had been maintained by the Joe Biden administration.
Trump has alleged that the new tariffs are necessary to stop illegal migration and the smuggling of fentanyl—in the case of Canada and Mexico—and against China because of its failure to halt the production and distribution of illicit fentanyl.
A Sense of Betrayal
The sense of betrayal on both sides of our shared borders is impossible to overestimate. Canadian Prime Minister Justin Trudeau—in announcing reluctantly his nation’s plans to impose retaliatory tariffs—used the press conference to recount the century of loyal friendship from Canada.
