US President Donald Trump has announced new tariffs on goods from Mexico, Canada, and China, saying they are needed to protect Americans from illegal drugs like fentanyl and to boost US manufacturing.
According to the BBC, tariffs are taxes on imported goods, and these new charges could make products more expensive for consumers.
For example, a 25% tariff on goods from Canada and Mexico means a $4 product will cost an extra $1. A 10% tariff will apply to Chinese goods. While tariffs on Mexico have been delayed for a month, those on Canada and China are set to start on February 4.
Trump argues that tariffs will help the US economy by protecting jobs and raising tax revenue. However, economists warn that companies often pass the extra costs onto consumers, leading to higher prices.
For instance, the BBC reports that car prices in the US could rise by $3,000 due to tariffs, as vehicle parts often cross borders multiple times during production. Similarly, goods like fruit, vegetables, beer, steel, and lumber are likely to become more expensive.
Canada, Mexico, and China have all promised to fight back. Canadian Prime Minister Justin Trudeau announced retaliatory tariffs on $107 billion worth of US goods, urging Canadians to “choose products made right here in Canada.” Mexico plans to impose its own tariffs, while China said it “firmly opposes” the move and will take “necessary countermeasures.” Together, these three countries account for over 40% of US imports.
Trump also hinted that tariffs on the European Union (EU) could happen “pretty soon,” though he suggested a deal with the UK might be possible.
The UK’s Business Secretary, Jonathan Reynolds, argued that the US should exclude the UK from tariffs because the US exports more to the UK than it imports. The EU has warned it will “respond firmly” to any tariffs, with EU foreign policy chief Kaja Kallas saying a trade war would only benefit China.
The BBC highlights that tariffs could lead to higher inflation in the US. Studies from Trump’s first term show that tariffs on washing machines raised prices by 34% before the tariffs expired.
Experts warn that these new tariffs could push US inflation from 2.9% to 4%, returning to mid-2023 levels. While Trump believes tariffs will help the US economy, critics argue they could spark a trade war, hurt consumers, and weaken global trade relationships. For now, the world is watching to see how these tariffs will impact prices and international trade.
Credit : BBC
https://www.bbc.com/news/articles/cn93e12rypgo