US tariffs: A blow to the world economy
WASHINGTON, United States — The tariffs imposed Saturday by President Donald Trump on products from the US's three leading trading partners are without recent precedent, sparking a trade war with powerful repercussions for all involved.
Here are some key points about how the tariffs will work and what impact they will have.
The United States is an essential trading partner for the three targeted countries: Canada, China and Mexico. But the impact will fall disproportionately on the US's immediate neighbors than on China, the world's second-largest economic power.
US imports from Canada, Mexico and China represented a combined total of over $1.2 trillion for the first 11 months of 2024 -- just over 40 percent of all US imports, according to the Commerce Department.
For Mexico and Canada, the United States is by far the largest customer -- accounting for 77 percent of Mexican goods exports and 84 percent of Canada's, according to the two countries' statistical agencies.
China's reliance on the US market is proportionately far smaller, representing just 15 percent of 2024 exports, according to Chinese customs data.
The United States had sizable commercial deficits with all three countries in the first 11 months of 2024: more than $270 billion with China, $157 billion with Mexico and $55 billion with Canada.
Given its greater exposure to US trade, Mexico is expected to be the hardest hit. According to Oxford Economics, the tariffs imposed Saturday could raise the inflation rate there to 6 percent annually, up from 4.2 percent in December, while the nation's currency, the peso, could see a 7 percent weakening -- with attendant risks of recession.
For Canada -- and excluding the effects of newly announced counter-tariffs -- the US tariffs could cause a 2.7 percent drop in the GDP this year and 4.3 percent drop next year, compared to the expected levels absent tariffs, according to chief EY economist Gregory Daco, adding to inflationary pressures.
For the US economy, the clearest impact should concern prices. The gamut of affected products is enormous -- ranging from automobiles and avocados from Mexico, to fowl and petroleum from Canada and iPhones from China, just