Valeria Ordóñez Ghio
(CNN) – US President-elect Donald Trump’s promise to impose large tariffs was a first warning to try to force allies and adversaries to the negotiating table on immigration and trade issues, an official said transition to CNN.
Trump vowed Monday to raise taxes American companies must pay on goods imported from Mexico, Canada and China starting his first day in the White House, unless those countries meet his demands to crack down on immigration and drugs flowing into the United States.
“Why not? There are no surprises,” the transition official told CNN. “We know what works.”
Trump’s posts on Truth Social on Monday appeared to be the opening act in a long-promised trade war with China and North American countries, as well as the latest illustration of how the president-elect plans to force other countries to help the United States slow down. the flow of migrants and drugs at ports and across borders, as he often promised on the campaign.
This comes despite warnings that tariff increases, if they come to fruition, could increase inflation. A Goldman Sachs analysis on Tuesday projected that Trump’s proposed increases would increase the underlying personal consumption expenditures index — a key indicator of inflation that excludes food and energy costs — by 0.9%. And Matt Priest, president of the footwear industry’s leading trade group, Footwear Distributors & Retailers of America, warned that Trump’s proposed tariffs would “directly increase costs for retailers and consumers, leading to higher prices on everyday staples.” like shoes.”
What products and services could be more expensive if Trump imposes tariffs on Mexico and Canada?
But it is a strategy that stems from the belief that similar threats worked in Trump’s first term in the White House, the transition official said. During those four years, Trump took an inflexible — and sometimes haphazard — approach toward Latin America, which was largely the source of migration to the United States. That approach included applying consequences, such as sanctions, and threatening and imposing tariffs.
The Goldman Sachs analysis also described Trump’s tariff announcement as “more reminiscent of the first Trump administration, when such tariffs were announced as a negotiating tactic.” Trump ultimately refused to impose some of his proposed tariffs.
In 2019, tariff threats resulted in Mexico relenting to the expansion of one of the Trump administration’s key immigration policies, known as “stay in Mexico,” according to two sources familiar with the matter. The unprecedented policy required migrants to remain in Mexico for the duration of their immigration proceedings in the United States.
At the time, Trump’s 25% tariff threat on Mexico was short-lived and resulted in a deal within weeks, pushed by a delegation of Mexican officials who traveled to Washington for urgent talks. Trump’s then-top adviser Stephen Miller and senior advisers to then-Vice President Mike Pence led the negotiations on behalf of the United States.
If negotiations had dragged on, major business lobby groups would have been prepared to sue the Trump administration, claiming that the tariffs were not an adequate response to a non-trade problem.
CNN previously reported that Trump’s team is planning a similarly aggressive strategy toward Latin America that will be a crucial element of plans to deport migrants and curb migration.
The president-elect is moving forward with that approach even as leaders in neighboring countries respond that it will not achieve Trump’s stated goals and would trigger a trade war that would hurt both sides.
Mexican President Claudia Sheinbaum said at a news conference Tuesday that “neither threats nor tariffs will solve the problem of migration or drug use.”
“Imposing one tariff would mean another would come in response, continuing until we put shared businesses at risk,” he said.
Sheinbaum to Trump: “It is not with threats or tariffs that the immigration phenomenon or drug consumption will be addressed”
“For example, some of the largest exporters from Mexico to the United States are General Motors, Stellantis and Ford Motor Company, which arrived in Mexico 80 years ago,” Sheinbaum said. “Why impose a tax that puts them at risk? It is unacceptable and would cause inflation and job losses in Mexico and the United States.”
Renegotiating your own trade agreement
The timing of Trump’s social media posts might have been a surprise, but their content was not.
On the campaign trail, he frequently promised to use tariffs as a negotiating tool to bend the policies of China and North American countries to his will.
His advisers have privately acknowledged that the tariffs could be applied more urgently to Canada and Mexico as Trump seeks to fulfill his campaign promise to renegotiate his own free trade agreement.
In July, Canada implemented a 3% tax on the profits of big foreign tech companies operating in the country, a move that both President Joe Biden’s outgoing administration and Trump’s incoming team consider discriminatory and in violation of a trade agreement. of 2018 between the United States, Canada and Mexico.
During Trump’s first term, the three countries spent more than a year negotiating that agreement, the United States-Mexico-Canada Agreement (USMCA), to replace the North American Free Trade Agreement, which went into effect. in 1994.
The new agreement requires the three countries to renew it by July 1, 2026, to keep it in force, and Trump’s team is expected to ask to renegotiate parts of the agreement. Advisers see the new tariff threat as a way to build leverage for Trump ahead of those talks.
Shares of General Motors, Ford and other automakers fall after Trump’s tariff threats
Trump hinted at that approach in an October speech at the Detroit Economic Club, where he said that upon taking office, he would “formally notify Mexico and Canada of my intention to invoke the USMCA’s six-year renegotiation provision that I established.”
Trump is said to want to open trade negotiations with Canada as soon as possible after taking office.
Howard Lutnick, co-chairman of Trump’s transition effort and his pick for commerce secretary, said in an interview with CNBC before the election that “of course” tariffs are a “bargaining piece,” and would help remove barriers in other countries to products made in the United States.
“This is just negotiating,” he said. But Lutnick added that Trump would not seek to impose tariffs that raise prices on goods that are not made in the United States.
“Do we make a lot of money from tariffs? Or do we bring productivity here and increase the wages of our workers here?” Lutnick said. “So it’s a win-win scenario.”
Matt Egan and David Goldman contributed to this post.
**What specific examples does Dr. Rodriguez provide of industries likely to be negatively affected by potential tariff hikes, and what are the potential cascading effects on the wider economy?**
## World Today News: Tariff Talk
**Host:** Welcome to World Today News, where we unpack the complex issues shaping our world. Today’s topic is the potential reemergence of tariffs as a negotiating tool, sparking debates on trade wars and global partnerships. We are joined today by two distinguished guests: **Dr. Elena Rodriguez**, an international trade economist specializing in US-Mexico relations, and **Ambassador David Thompson**, former US diplomat and expert on North American trade agreements.
Let’s begin by delving into the potential economic repercussions of these threatened tariffs. Dr. Rodriguez, the article mentions concerns raised by economists and industry leaders about the potential impact on inflation and consumer prices. What are your thoughts on this?
**Dr. Rodriguez:** (Provides informed analysis of potential economic ripple effects, discussing sectors most vulnerable to tariff hikes, and possible inflationary pressures)
**Host:** Ambassador Thompson, you have extensive experience navigating complex trade negotiations. How effective do you believe tariff threats are as a negotiating strategy, particularly in the context of the USMCA and negotiations with Mexico and Canada?
**Ambassador Thompson:** (Shares perspective on effectiveness of tariff threats, considers long-term ramifications, and suggests alternative approaches for achieving desired outcomes)
**Host:**
This brings us to our next section – the USMCA. The article highlights President-elect Trump’s intention to renegotiate certain provisions of the agreement. Ambassador Thompson, what are some key areas you anticipate being renegotiated?
**Ambassador Thompson:** (Highlights specific areas of the USMCA potentially subject to renegotiation, considers Canada’s recent digital tax as a point of contention, and discusses the potential for reaching mutually beneficial solutions)
**Host:** Dr Rodriguez, Mexican president Claudia Sheinbaum has expressed concerns about the potential for escalating trade tensions and the negative impact on businesses in both countries. Putting aside political rhetoric, what are the tangible risks for economic cooperation between the US and Mexico if tariffs are imposed?
**Dr Rodriguez:** (Provides nuanced analysis of potential risks for both countries, offers examples of specific industries likely to be affected, and emphasizes the importance of maintaining open communication channels)
(**Transition to final section**)
**Host:** Looking ahead, what do you see as the most likely scenario for US trade policy towards Mexico and Canada in the coming months? Dr. Rodriguez, what do you envision as the likely outcome of these escalating tensions?
**(Dr. Rodriguez offers informed prognostication based on her expertise, considering potential courses of action from both the US and Mexico)**
**Host:** Ambassador Thompson, offering a diplomat’s perspective, what are key steps both sides could take to de-escalate tensions and find common ground?
**(Ambassador Thompson explores potential solutions, emphasizing the need for diplomacy, open dialog and collaborative problem-solving)**
**Host:**
Thank you both for providing such valuable insights on this crucial topic. The future of US trade relations with its North American neighbors remains uncertain, but these discussions highlight the need for well-informed policies that balance economic interests with international cooperation.
This has been World Today News, staying informed on the issues that matter.
