Former U.S. President Donald Trump, known for his aggressive stance on tariffs, is reportedly shifting his economic battle plan, now setting his sights on Mexico and Canada. This strategic pivot raises fresh concerns about North American trade relations and the future of the United States-Mexico-Canada Agreement (USMCA).
Sources close to Trump’s campaign suggest that if he wins re-election in 2024, he plans to impose new tariffs on imports from America’s closest trade partners. This marks a departure from his first term, when his trade war primarily targeted China. But why the sudden change in focus?
Why Mexico and Canada?
– Reshoring American Manufacturing
Trump has long advocated for bringing manufacturing jobs back to the U.S. His team argues that despite USMCA, too many American companies still rely on factories in Mexico and Canada for cost savings. Tariffs could be used as leverage to push businesses to relocate production back to the U.S., boosting domestic employment.
– Auto Industry and Supply Chains
Mexico has become a powerhouse in automobile manufacturing, supplying vehicles and parts to U.S. automakers at lower costs. Trump’s potential tariffs could force carmakers to reconsider supply chains—a move that may appeal to auto workers in key swing states like Michigan, but could also lead to higher car prices.
– Immigration as an Economic Weapon
Trump has frequently linked trade policy with immigration, particularly regarding Mexico. He previously threatened tariffs as a means to pressure the Mexican government into tightening border controls. With immigration expected to be a key election issue in 2024, tariffs could serve as another tool in his border enforcement strategy.
– Reducing Trade Deficits
Trump has consistently railed against trade deficits, viewing them as signs of economic weakness. In 2023, the U.S. trade deficit with Mexico reached record levels, fueling arguments among Trump’s advisors that tariffs could help balance the scales.
What Would This Mean for North America?
A tariff-heavy approach to Mexico and Canada could strain relations with America’s closest allies, potentially destabilizing USMCA. Business leaders warn that such moves could disrupt supply chains, raise consumer prices, and provoke retaliatory tariffs from Mexico and Canada, harming U.S. exports.
While Trump’s focus on China remains, this shift suggests a broader realignment of his trade priorities. Whether such a strategy would benefit the U.S. economy—or ignite a new trade war within North America—remains to be seen.
For now, businesses and policymakers in Mexico and Canada are bracing for what could be another turbulent era in U.S. trade policy.
source: news.sky.com