President Trump’s reckless weekend threat of sabotaging trade in North America and spiking inflation with instant 25% tariffs on Mexican and Canadian imports starting today severely spooked investors, but did manage to get him some promises of tougher interdiction of people and drugs at the southern and northern borders. It’s a dangerous way to deal with our friends and closest neighbors, whose leaders are behaving much better than Trump.
We’ll see what happens with Trump’s 10% duty on China.
We are not sure if Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau blinked in their Monday phone calls with Trump, as the president crows, or just winked to humor the president, who keeps saying how he so loves tariffs.
Of course Trump sees a big victory for himself, as he did the weekend prior when he also used the 25% tariff weapon to get Colombia to accept a couple flights of deported Colombian nationals.
Such a huge duty on Colombia put at risk goods, like fresh flowers, compromising about 0.5% of U.S. imports. Mexico and Canada, however, account for 60 times as much, roughly 30% of all imports into the United States. Which is why when the stock exchange opened at 9:30 yesterday morning it dropped far and fast.
It was only the announced deal within the hour with Mexico following Sheinbaum’s phone call forestalling the tariffs due to commence at midnight last night that eased Wall Street’s fears of economic chaos. The trade duties have been frozen for a month and hopefully will never happen.
The same deal came in the late afternoon with Canada after Trudeau’s second call of the day with Trump.
Despite having very different borders and different issues, the two “deals” are quite similar.
Sheinbaum is pledging 10,000 troops to the border. Trudeau says: “nearly 10,000 frontline personnel are and will be working on protecting the border.”
The Mexican “soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country” says Trump.
For his part, Trudeau promises “In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada- U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering. I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million.”
Sounds like Trudeau got his answers for Trump from Sheinbaum to let the president hear what he wants. Whatever works to prevent those ruinous tariffs.
Adding 10,000 people to the border and denouncing fentanyl are worth it to avoid a trade war and soaring prices on just about everything.
Even Trump recognized that the steep tariffs would bring pain to American consumers and we thank Sheinbaum and Trudeau for acting quickly to satisfy Trump.
Sheinbaum has just started a six-year term and Trudeau is soon to leave office after a decade in power. But both the novice and the veteran responded to Trump’s threats with grace and finesse.
Trump can tout his “wins,” but the real winners are 335 million Americans as well as 128 million Mexicans and 40 million Canadians. Everyone on the continent, in all three countries, would have been seriously hurt by the Trump tariffs.
