In his first term, US President Donald Trump imposed tariffs on China. His plans for new tariffs in his second term could hurt Mexico, but also Canada and the European Union (EU), writes the BBC.
In 2018, Trump introduced tariffs of up to 50 percent on washing machines and solar panels.
The US government argued that American manufacturers in these sectors were struggling with unfair competition from abroad.
It also imposed tariffs of 25 percent on steel and 10 percent on aluminum.
However, the steel and aluminum tariff exempted Mexico and Canada, thanks to the free trade agreement between the U.S., Canada, and Mexico, known as the North American Free Trade Agreement (NAFTA), which was later replaced by the United States, Mexico, and Canada Agreement (USMCA).
The EU, which was one of the largest exporters of steel to the US, retaliated by imposing tariffs on more than $3 billion worth of American goods, including jeans, colored alcohol and Harley-Davidson motorcycles.
Trump also imposed tariffs on more than $360 billion worth of Chinese goods, from meat to musical instruments.
China responded by imposing tariffs on more than $110 billion worth of American goods.
Under previous president Joe Biden, most tariffs on goods from China remained in place and new ones were introduced on some products, such as electric vehicles.
What impact have the tariffs that Trump imposed during his first term had on those countries?
Trump’s tariffs have reduced the amount of goods the US imports from some countries, but have increased other countries’ exports to the US.
Before 2018, the weight of Chinese goods was more than 20 percent of total US imports, while today it is less than 15 percent, according to data from the US Bureau of Statistics.
By 2023, Mexico will have surpassed China to become the largest exporter to the US.
It now exports goods worth $476 billion to the US, while the value of imports from China is $427 billion.
This change is partly due to many companies, especially car manufacturers, moving production to Mexico to take advantage of the free trade agreement with the US and the country’s low production costs.
In 2023, Mexico became the seventh largest automobile producer in the world.
Trump has threatened to impose 25 percent tariffs on products from Mexico and Canada until both countries stop the flow of immigrants and the production of illegal fentanyl.
He also announced a 10 percent “punitive” tariff on top of already existing tariffs on Chinese goods, arguing that many of the chemicals used to make illegal fentanyl come from China.
These tariffs could come into effect as early as February 1.
Trump also threatened to impose tariffs on products from the EU, saying “we are being treated very, very badly.”
Canadian Prime Minister Justin Trudeau has vowed to retaliate with tariffs on alleged billions of dollars worth of products.
“Canada will respond – and all options are on the table,” he said.
In response to the additional tariffs announced by Trump, China’s Foreign Ministry has said it will defend national interests.
How could tariffs hurt Canada and Mexico?
If the latest tariffs go into effect, they will hurt the economies of Canada and Mexico the most, said Professor Stephen Millard of Britain’s National Institute for Economic and Social Research.
Both countries are heavily dependent on the US.
Currently, the US buys 83 percent of all goods that Mexico exports, as well as 76 percent of Canadian exports.
“Canada sells large amounts of oil and machinery to the US, and 25 per cent tariffs could reduce its GDP by 7.5 per cent over five years, which would be a huge blow,” Millard said.
“If tariffs of 25 percent were imposed on Mexico, companies that opened car factories in that country could transfer production to the countries of origin of those manufacturers. The tariffs could reduce Mexico’s GDP by 12.5 percent over five years, which would be a huge loss,” he continued.
Lila Abed of the Mexico Institute at the US Wilson Center said US tariffs would be “catastrophic” for Mexican workers.
“About five million jobs in the U.S. depend on trade between the U.S. and Mexico… and a recent study shows that about 14.6 million jobs in Mexico depend on trade with North American partners,” she said.