With U.S. President-elect Donald Trump promising a 25% tariff on Canada and Mexico, two leading U.S. trade partners, and another 10% tariff hike on China, TaiwanPlus talks to economic analyst Nick Marro to learn what global pressures these tariffs could ignite.
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00:00If Trump posts 25% tariffs on Canada and Mexico, this will result in higher prices for American
00:08consumers.
00:09So, could these tariffs ultimately backfire on him?
00:13They could.
00:14That's kind of the main political consideration and economic consideration that we're looking
00:18at over the next couple of weeks.
00:20It's going to require the Trump team to really get comfortable with the fact that right now,
00:25as the U.S. is battling inflation, these policies are going to reignite price pressures.
00:31U.S. voters partially voted for the economy in November.
00:37And if we see kind of a blowback from these policy moves, then there could be some consequences.
00:42The big caveat is Trump's base tends to be quite forgiving.
00:47And so, if we do see any, I guess, implications of this or shocks from this, it might not
00:52happen for a couple of months.
00:54But it's going to cause a lot of anxiety, particularly in the U.S. business community,
00:57among other U.S. trade partners, in terms of the direction of travel for where U.S.
01:01trade policy is looking at going in 2025.
01:05In July of 2020, the United States signed a trade deal with Canada and Mexico.
01:10So, with respect to that deal, is there action that Canada and Mexico could take to push
01:16back against these proposed tariffs?
01:19Yeah, well, I mean, the threats that we're seeing from Donald Trump are essentially not
01:24really based on economic considerations or based on immigration.
01:27They're based on allegations of drugs going into the U.S.
01:30And so, tariff imposition is happening kind of outside of the U.S. NCA, suggesting that,
01:35in theory, the U.S. could be in violation of these provisions.
01:38That means that we'll be looking at how Mexico and Canada are going to respond, particularly
01:42from a retaliatory perspective.
01:45I think U.S. agricultural exports are going to be the sector to watch here.
01:49But it raises a lot of uncertainty around not just kind of, you know, what's permissible
01:53under U.S. NCA, but what this means for U.S. NCA.
01:57The Chinese embassy responded to the proposed tariffs, saying that nobody would win a China-U.S.
02:03trade war.
02:04But this seems like a trade war on everybody right now.
02:08Is there anybody or any part of any supply chain which might come out ahead?
02:13The moves that we've just seen out of, you know, from Donald Trump are maybe the initial
02:17salvos in what looks like could be a pretty bruising trade war with the entire world.
02:22All that being said, I mean, based on where currencies go, whether we see exemptions,
02:27whether we see kind of the U.S. strike some carve-outs or negotiations with particularly
02:31key security economic partners, there could be some countries that are, you know, less
02:36affected than others.
02:37I mean, those we are anticipating to be the biggest losers would include China, Mexico
02:43and the next one we'll be looking at very closely is potentially Vietnam.
02:45But when we look at other countries like, you know, Malaysia, Thailand, where, you know,
02:50these nations haven't really been as much on Donald Trump's radar, they have benefited
02:54quite strongly from supply chain shifts over the past couple of years.
02:58And if we see their currencies depreciate against the dollar, we might see an offsetting
03:02effect on higher U.S. duties.
03:04So those countries might actually stand to benefit from this.
03:07But this is an optimistic reading.
03:08At the end of the day, higher tariffs are going to lead to more inefficient supply chains.
03:12They're going to risk inflationary blowback.