Trump’s tariff vow raises risk of trade wars

With less than two months to go before being sworn into office again as the 47th President of the United States, President-elect Donald Trump is essentially picking up from where he left off during his term as the 45th President, in terms of his plans to implement tariffs.

In posts made on his Truth Social platform earlier this week, Trump said that, on Jan. 20 when he takes office, he will sign an Executive Order, calling for a 25% tariff on all U.S.-bound imports from China and Mexico, as well as an additional 10% tariff on all U.S.-bound imports from China—with the latter announced in a separate Truth Social post

“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump said on Truth Social. “It is time for them to pay a very big price!”

On Wednesday, Reuters reported that no exemptions are planned for crude oil coming from Canada. The U.S. imports more than 4 million barrels of crude per day from Canada.

“Across-the-board trade policies that could inflate the cost of imports, reduce accessible supplies of oil feedstocks and products, or provoke retaliatory tariffs have the potential to impact consumers and undercut our advantage as the world’s leading maker of liquid fuels,” a spokesperson for the American Fuel and Petrochemical Manufacturers group, which represents oil refiners, told Reuters.

In a LinkedIn post, Jason Miller, Eli Broad Endowed Professor of Supply Chain Management and Interim Chairperson of the Department of Supply Chain Management within Michigan State University’s Eli Broad College of Business, explained that these tariff actions could ramp up inflation. As an example, he said a 10% universal tariff represents a 2.5% cost shock to goods.

“This will be made worse because many manufacturers will respond to receiving tariff protection by raising their own prices,” he wrote. “One challenge with looking at costs alone is that markups also need considered, and we don’t fully know how wholesalers and retailers will respond. Regardless though…universal tariffs will be inflationary for goods. Anyone who is telling you otherwise either has a political motive or doesn’t understand basic economics.”

What’s more, should President-elect Trump go through with these tariffs upon being inaugurated, various reports indicated they would run counter to the terms set forth in the United States-Mexico-Canada Agreement (USMCA), which was inked during his first term in office.

In response, Mexico’s President Claudia Sheinbuam said the country could respond with its own tariffs on U.S. goods.

“To one tariff will follow another in response and so on, until we put our common businesses at risk,” she said, according to a BBC report.

Canada’s Prime Minister Justin Trudeau said he had spoken with Trump and would discuss the issue with Canada’s provincial leaders.

With reporting from Logistics Management’s Jeff Berman

For more on this story, read: President-elect Trump is ready to implement new tariffs upon taking office in January

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