Trump Tariffs on Canada and Mexico bad for the economy, businesses, American trade deal integrity

President Trump plans to make his envisioned 25 percent tariffs on Canada and Mexico go into effect on March 4, to the detriment of the U.S. economy, businesses, and our national integrity concerning trade agreements, says CEI Senior Economist Ryan Young:

There are several problems with Trump’s last-minute announcement that he will go through with 25 percent tariffs against Canadian and Mexican goods. Here are three big ones.

The economy: These tariffs will raise prices of cars, construction, food, and countless other goods. Though tariffs are not strictly inflationary, look for the CPI and other inflation indicators to increase when March data is available, as well as slightly slower economic growth. The Federal Reserve’s job of constraining inflation just got even more difficult.

Uncertainty: Tariffs instantly disrupt supply chains carefully laid down over decades. It will take months or years for American businesses to reroute. Besides causing short-term shortages and price hikes, this discourages investment.

America’s word: Trump is almost certainly violating the USMCA agreement that he himself negotiated eight years ago. Trump’s going back on his word shows our trading partners around the world how much America’s word is worth. This will make future diplomatic agreements more difficult, and not just for trade.