“Trump tore up the North American trade deal that he’d signed (and praised as the “best agreement we’ve ever made”) just five years ago. He sent the stock market tumbling, forced the American automotive industry and other manufacturers to beg for mercy, and antagonized two of America’s biggest trading partners and allies. And after all that, he got virtually nothing in return.
Indeed, Canada’s and Mexico’s governments may have gotten more. Their leaders learned that Trump sees 10,000 as a big and significant number and that they can appease his tariff fever by promising to just keep doing what they already do—as long as they make it sound like he’s convinced them to change course.”
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“when Trump was asked directly by reporters on Saturday if there was anything Canada could do to avoid the tariffs, he said “nothing.” In various social media posts, Trump claimed first that the tariffs were intended to stop fentanyl from coming across the border And then, a day later, said they were meant to compel Canada to join the United States. Vice President J.D. Vance tried his hand at putting some random meats on this tangle of bones Sunday night, writing on X that Canada wasn’t keeping up with its NATO obligations.”
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“The leaders of Mexico and Canada effectively called the president’s bluff that there was nothing they could do to avoid tariffs. Facing the reality that tariffs would cause serious pain for American businesses—something that he even admitted last weekend (maybe he’s learning?)—Trump retreated, leaving the United States–Mexico–Canada Agreement in tatters and the relationship between America and two of its key allies strained.
We should be glad that Trump safely found an off-ramp after steering the United States recklessly into a potentially ugly situation, and we can hope that he did not cause too much long-term damage while getting there.”
“the U.S. is heavily reliant on Canadian crude oil to make liquid fuels and other petroleum products. Most U.S. refineries were built in the 1970s to accommodate heavy oil from the Middle East and Canada. This was well before the American shale boom, which brought lighter-grade oil to the market. In 2023, nearly 60 percent of crude imports came from Canada and July 2024 saw a record 4.3 million barrels of oil per day imported from the country.
“Canada is by far our largest supplier, and we build refineries specifically to refine heavier Canadian crude,” explains Nick Loris, the executive vice president of policy at C3 Solutions, a free market energy think tank. “Depending on the tariff rate and how long they’re in place, gas prices could rise anywhere from 10-30 cents per gallon, with the Midwest and the Rocky Mountain Region getting hit the hardest,” Loris tells Reason.”
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“tariffs could also harm American nuclear power. Despite generating the most nuclear energy in the world, the U.S. relies on other nations for uranium to fuel its fleet. Canada is the largest supplier of raw uranium (27 percent of imports in 2022), followed by Kazakhstan (25 percent) and Russia (12 percent), the latter of which the U.S. depends on for roughly a quarter of its uranium enrichment needs.
With last year’s passage of a bill to ban imports of Russian uranium signed into law, Canada is primed to play an increasingly important role in America’s uranium supply. Tariffs would threaten this and could increase fuel costs for American nuclear power producers”
“The annual number of drug-related deaths in the United States rose by 44 percent between 2016 and the last year of his first term. Now Trump blames foreign officials for his failure”
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“As The New York Times reported in December, Mexican cartels already have a backup plan. They are recruiting “chemistry students studying at Mexican universities” to synthesize fentanyl precursors, “freeing them from having to import those raw materials from China.”
Trump thinks the Mexican and Canadian governments could do more to shut down fentanyl manufacturing within their countries. But to the extent they succeeded in doing that, production would simply shift elsewhere, as has happened repeatedly with drugs such as cocaine, heroin, and methamphetamine.”
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“Mexican drug cartels “move illicit fentanyl into the United States, primarily across the southwestern border, often in passenger vehicles,” the CRS noted. “The U.S.
Department of Homeland Security asserts that 90% of [seized] fentanyl is interdicted at ports of entry, often in vehicles driven by U.S. citizens. A primary challenge for both
Mexican and U.S. officials charged with stopping the fentanyl flow is that [the cartels] can meet U.S. demand with a relatively small amount.””
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“Fentanyl also enters the United States by mail, and it is not feasible to intercept all of those shipments, especially given their small size and the enormous volume of packages.”
“The International Emergency Economic Powers Act, passed in 1977, grants the president broad authority over economic transactions, and a wide range of abilities to deal with “any unusual and extraordinary threat,” stemming in whole or in part from foreign sources.
Presidents, including Trump’s predecessor Joe Biden, have used the law to impose economic sanctions on other countries, including on Russia after it launched its 2022 war on Ukraine.
But the closest a president has come to citing a national emergency to impose tariffs was when President Richard Nixon used a different law — the Trading with the Enemy Act of 1917 — to levy a temporary universal tariff on all imports in 1971.
Trump justified his new tariffs Saturday by pointing to “the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl,” which he claims Mexico, Canada and China are not doing enough to keep from coming into the United States.
But Bill Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, said Trump’s use of IEEPA to justify his trade actions “doesn’t really pass the red-face test,” setting the stage for a company or trade association whose members have been harmed by the action to sue.
“The question will be, can you find a judge who will write an injunction to stay the tariffs from going into effect,” Reinsch said. “And my prediction is that will be hard, because you’re asking a federal judge to essentially say, ‘I know more than the President does about what an emergency is.’ And I think judges are going to be reluctant to do that.”
That won’t stop a lawsuit from proceeding, most likely all the way to the Supreme Court, Reinsch said, but it could be years before there is a conclusion to the legal battle.
“The courts have historically upheld the president’s power to take emergency actions, especially when they are related to national security. But one important question is whether they will uphold the use of tariffs. In the past, [IEEPA] has only been used to impose sanctions,” said Tim Brightbill, a trade attorney at the law firm Wiley Rein in Washington, DC.
“While it is possible that companies or industry groups would seek an injunction, they probably face an uphill battle blocking the new tariffs,” Brightbill said.”
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“the U.S. effectively killed the WTO Appellate Body during Trump’s first term by blocking the appointment of new judges, leaving it without the ability to adjudicate disputes. And there’s little to suggest the Trump administration would abide by a WTO ruling even if the organization were able to issue one.”
“Beijing struck back on Tuesday after U.S. President Donald Trump imposed 10 percent tariffs against China, announcing levies of 15 percent on U.S. liquefied natural gas and coal, and 10 percent on crude oil, farm equipment and some autos.
Beijing also set further export controls on rare metals, and announced an anti-monopoly investigation into Google, the search engine owned by Alphabet, and a number of other U.S. companies.
The Chinese measures will take effect on Feb. 10, leaving time for Trump to talk to President Xi Jinping about how to avoid further trade escalation.”
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“Beijing also filed a complaint to the World Trade Organization (WTO), invoking its dispute settlement procedure.”
“In exchange for the delay of these tariffs, the Mexican government agreed to send 10,000 national guard troops to its northern border while Trump vowed to stem the flow of American firearms into Mexico. Canada, meanwhile, pledged to implement its 1.3 billion border security plan (which it had already enacted in December). Trump posted on his Truth Social platform that he was “very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured.””
So far, the concessions from Mexico and Canada are: things they were going to do anyways, things you didn’t need a big tariff threat to get, and two-way deals where the U.S. made its own promises. So, rather than successful threats getting important concessions, we had economic disruption, economic fears, and acted like assholes on the world stage with nothing substantial in reward.
“During former President Donald Trump’s term in office, he promised that higher tariffs on American imports would reduce the country’s large trade deficit.
At the time, many economists disputed that notion. Tariffs might marginally reduce the import side of the trade ledger, but they also reduce economic output (and therefore exports), so the net effect on the trade deficit was likely to be minuscule, they warned.
No matter. In 2017, the White House’s official Trade Policy Agenda highlighted how America’s manufacturing trade deficit had grown from $317 billion in 2000 to $648 billion in 2016. That was evidence, the document claimed, that greater levels of trade had triggered “a period of slowed GDP growth, weak employment growth, and sharp net loss of manufacturing employment in the United States.”
You know what happened next. Tariffs were raised. Then more tariffs were added. President Joe Biden took over and left Trump’s higher tariffs in place. American businesses and consumers paid the cost of those higher taxes. The average tariff rate on imports to the United States has climbed from 1.5 percent to over 3 percent, and annual tariff revenue has nearly tripled.
So what happened to the trade deficit? It didn’t fall.
In 2017, the last full year before Trump’s tariffs were imposed, America’s overall trade deficit was $517 billion. By 2023, it had grown to $785 billion, according to new Census Bureau data.
The story is the same when you look at the manufacturing trade deficit, the narrower category that the Trump administration had highlighted in that 2017 report. It climbed to over $1 trillion by 2021, nearly 60 percent higher than the 2016 figure that was cited by the White House as evidence that free trade was a failure.
Rather than reducing the manufacturing trade deficit, the higher tariffs likely led to its sharp increase, writes Ed Gresser, a former assistant U.S. Trade Representative. “Manufacturers import goods so as to turn them into other goods, and are big tariff payers,” writes Gresser in a post for the Progressive Policy Institute, where he now works as vice president for trade policy. “So the tariffs raised the costs of industries like automobiles, machinery, and toolmaking; they faced a bit more challenges competing against imports and succeeding as exporters; and the overall goods/services deficit grew more concentrated in manufacturing.””
“”I don’t think we’re going to see a deal like we saw in the first term,” Robert O’Brien, Trump’s fourth and final national security advisor, told Chalfant. “I think people were generally happy with [the previous deal], but as it turned out, the Chinese didn’t honor it.””