Tag Archives: tariffs

Sweeping tariffs are now in effect

Flags of Mexico Canada United States

Important Takeaways:

  • At exactly 12.01am ET this morning, the long-awaited 25% US tariffs on Canada and Mexico as well as an additional 10% levy on China went live. The 25% tariffs taking effect apply to all imports from Canada and Mexico, except for Canadian energy which will be tariffed at a 10% rate.
  • The 25% EU tariffs, sectoral tariffs on copper, lumber etc., as well as the broader suite of reciprocal tariffs
  • Swift retaliation followed from both Canada and China. Canada imposed 25% tariffs of its own on $155bn of US exports including orange juice and bourbon in two stages – immediate tariffs on $30bn of goods and the remaining $125bn in 21 days.
  • China raised tariffs by 10% on soybeans, pork, beef, and fruits starting March 10th, and 15% tariffs on chicken, wheat, corn and cotton in line with yesterday’s press reports of agricultural goods being Chinese tariff targets.
    • Additionally, China’s Customs suspended imports of US lumber effective immediately, and suspended soybean import qualification for three US companies

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Ontario Premier Doug Ford says he is willing to enter a “trade war” with America; threatens to cut off electricity to NY, Michigan, and Minnesota

Doug Ford

Important Takeaways:

  • In an interview on NBC News, Ford said he had never met a single American who supported the idea of tariffs, despite the fact that the majority of Americans voted for Donald Trump.
  • Ford ranted:
    • We are the largest purchaser of alcohol in the world. We buy over 3,600 products from 35 states. I talked to the Governor of Kentucky and Mitch McConnell. Don’t touch our bourbon. I’m going after absolutely everything.
    • And I don’t want to. We keep the lights on for 1.5 million homes in manufacturing in New York, in Michigan, and in Minnesota.
    • If he wants to destroy our economy and our families, I will shut down the electricity going down to the U.S. And I’m telling you, we will do it.
  • Ford then went on to say that Americans, particularly those in red states, would feel immense pain as his retaliatory measures.
  • He continued:
    • This is the last thing we want to do. It’s one person that’s coming to attack us economically.
    • Your closest friend, your treasured ally, that will stand shoulder to shoulder with you in every situation you’ve faced, and he’s attacking the person, his number one customer.
    • There’s no country in the world that buys more products off the U.S. than we do.
    • We’re the number one trading customer to 28 states, and a lot of them are red states. They’re going to feel the pain like they’ve never felt before.
    • We’re going to feel the pain, but I’ll tell you, Canadians are resilient, we’re strong, we’re proud, and we’re going to fight back like they’ve never seen before.

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Crackdown on Fentanyl: Trump pressures China with high tariffs 10% on top of 25% if more isn’t done to stop the flow of illegal drugs into the US

Important Takeaways:

  • China is reacting angrily to President Trump’s pledge to impose an additional 10% tariff on its products, saying fentanyl is “the U.S.’s own problem.”
  • Trump said the levy will take effect on Tuesday alongside a 25% tariff on products from Canada and Mexico. The Chinese tariff comes on top of a previously announced 10% tariff on products from the Asian superpower, ratcheting up tensions as the U.S. president says the trio of nations are letting deadly opioids pour into American communities.
  • “China deplores and opposes this move, and will take what is necessary to firmly defend its legitimate interests,” Chinese foreign ministry spokesman Lin Jian said Friday. “The fentanyl issue is just an excuse the U.S. uses to impose tariffs on, pressure and blackmail China, and they punish us for helping them. This will not solve their concerns.”
  • Chinese manufacturers make precursor chemicals for fentanyl that reach Mexico, where cartels finish the drug product and send it to U.S. communities. A tiny percentage is seized at the Canadian border but the White House stressed that domestic production is increasing in Canada and even small amounts can kill in large numbers.
  • On Friday, Mr. Lin said China agreed to officially restrict fentanyl-related substances at Mr. Trump’s request in 2019. It also struck a deal with President Biden to crack down on the flow of precursor chemicals.
  • “China has conducted counter narcotics cooperation with the U.S. side in a broad-based and in-depth way. The remarkable progress is there for all to see,” Mr. Lin said. “Pressuring, coercion and threat is not the right way to deal with China. Instead, mutual respect is the basic prerequisite.”
  • Trump said there hasn’t been nearly enough progress and that families are being destroyed by tens of thousands of overdose deaths per year in the U.S.
  • Countries like China and Mexico have suggested the U.S. is to blame for its crisis because too many people are addicted to drugs.
  • “China is one of the world’s strictest countries on counter narcotics both in terms of policy and its implementation,” Mr. Lin said. “The fentanyl issue is the U.S.’s own problem.”

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Under pressure of tariffs Mexico extradites 29 prisoners to US to face a Federal Judge

Important Takeaways:

  • In an apparent bid to gain favor with President Trump, who has promised to enact tariffs against Mexico starting March 4, the Mexican government has extradited 29 prisoners wanted by the feds to the U.S. The list of miscreants includes notorious drug lord Rafael Caro Quintero, who was reportedly behind the brutal murder of a DEA agent.
    • Mexico has extradited drug lord Rafael Caro Quintero, who was behind the killing of a U.S. DEA agent in 1985, to the United States with 28 prisoners requested by the U.S. government, a Mexican government official said Thursday.
    • The official, who requested anonymity because they were not authorized to discuss the case, confirmed Caro Quintero’s extradition. Mexico’s Attorney General’s Office said in a statement that the 29 prisoners extradited Thursday faced charges related to drug trafficking among other crimes.
    • Mexico’s government is trying to head off U.S. President Donald Trump’s threat of imposing 25% tariffs on all Mexican imports that could be imposed next week.
    • Caro Quintero was arrested by Mexican forces in 2022.
  • Trump threw down the gauntlet earlier Thursday in a Truth Social post:
    • Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels…
    • We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled.
    • [The Guardian reported] Caro Quintero, the former leader of the now defunct Guadalajara cartel, spent 28 years in prison for the torture and murder of Enrique “Kiki” Camarena before being released in 2013 when a court overturned his sentence.
  • Upon his release, he quickly returned to drug trafficking and ended up earning a place on the FBI’s Most Wanted list. Now he may be facing a federal judge as soon as Friday, according to reports.
  • But he’s not the only bad dude who will soon be facing a reckoning:
    • Other big names being handed over to the US include two former leaders of the notoriously violent Zetas cartel, Omar and Miguel Ángel Treviño Morales. They were arrested in 2013, but US authorities had accused them of continuing to run the Cartel del Noreste, the successor of Las Zetas, from prison.

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President Trump ordered a 25% import tax on all steel and aluminum entering the US to begin March 2025

Important Takeaways:

  • Leaders in Europe and Canada have said they will not let Donald Trump’s plans to hit their steel and aluminum exports with tariffs go unchallenged.
  • Trump said he was “simplifying” the rules and the measures would boost domestic production.
  • “This is a big deal, the beginning of making America rich again,” Trump said, signing the proclamation, which said the measures would come into force on 12 March.
  • “Our nation requires steel and aluminum to be made in America, not in foreign lands,” he added.
  • The US is the world’s largest importer of steel, counting Canada, Brazil and Mexico as its top three suppliers.
  • Canada alone accounted for more than 50% of aluminum imported into the US last year.
  • The tariffs will raise the cost of bringing the metals into the US, sparking concern among businesses in the US that rely on the imports and many world leaders because it will make it more expensive for companies to sell their products in the world’s largest economy.
  • Trump officials said the latest moves were aimed at stopping countries such as China and Russia from avoiding tariffs by routing low-cost products through other countries.

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Trade Wars: China strikes back, adds tariffs on US products

Top 10 US imports from China

Important Takeaways:

  • China announced retaliatory tariffs on select American imports and an antitrust investigation into Google on Tuesday, just minutes after a sweeping levy on Chinese products imposed by U.S. President Donald Trump took effect.
  • American tariffs on imports from Canada and Mexico were also set to go into effect Tuesday before Trump agreed to a 30-day pause as the two countries acted to address his concerns about border security and drug trafficking. Trump planned to talk with Chinese President Xi Jinping in the next few days.
  • This isn’t the first round of tit-for-tat actions between the two countries. China and the U.S. engaged in an escalating trade war in 2018 when Trump repeatedly raised tariffs on Chinese goods and China responded each time.
  • This time, analysts said, China is much better prepared, announcing a slew of measures that go beyond tariffs and cut across different sectors of the U.S. economy. The government is also more wary of upsetting its own fragile and heavily trade-dependent economy.
  • “It’s aiming for finding measures that maximize the impact and also minimize the risk that the Chinese economy may face,” said Gary Ng, a senior economist at Natixis Corporate and Investment Banking in Hong Kong. “At the same time … China is trying to increase its bargaining chips.”
  • John Gong, a professor at the University of International Business and Economics in Beijing, called the response a “measured” one. “I don’t think they want the trade war escalating,” he said. “And they see this example from Canada and Mexico and probably they are hoping for the same thing.”
  • China announced export controls on several elements critical to the production of modern high-tech products.
  • They include tungsten, tellurium, bismuth, molybdenum and indium, many of which are designated as critical minerals by the U.S. Geological Survey, meaning they are essential to U.S. economic or national security that have supply chains vulnerable to disruption.
  • The export controls are in addition to ones China placed in December on key elements such as gallium.

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Analysis: Prices lurch higher as Home Depot, other importers battle surging cargo, commodity costs

By Lisa Baertlein

(Reuters) – As Home Depot heads into its busy spring project season – when shoppers build backyard decks and buy patio furniture – it is tangling with surging costs for goods and transportation, on top of tariffs that cost it and other U.S. importers billions of dollars.

Across the United States, major retailers and makers of everything from Peloton spin bikes and La-Z-Boy recliners to Kia Sorrento SUVs are battling the same profit-squeezing pressures. They pass those costs along to home-bound consumers, who are snapping up expensive-to-ship items like appliances, furniture and exercise equipment.

“As I think about all that’s going on now, I reflect back to the tariffs and… long for (when) that was our biggest issue,” Home Depot President Edward Decker said on a webcast on Tuesday.

Retailers like Home Depot, Walmart and Amazon.com got a boost when shoppers redirected travel and entertainment spending due to the COVID-19 pandemic. Now they must quickly replenish supplies to sate consumer demand.

Like other U.S. importers, they are rushing in products from China, Vietnam and other Asian countries – swamping U.S. seaports and spawning delays and disruptions that ripple across the globe.

Home Depot struggled to keep enough products on shelves during the fourth quarter, when strong sales required it to bring in more inventory than a year earlier.

Home Depot executives said consumer prices for construction supplies like lumber and copper products are up due to commodity cost spikes. “A stick of lumber that was 2-odd dollars is now over $5,” Decker said.

At the same time, major appliance prices are on a steep climb, with laundry equipment up more than 23% in January versus a year ago, according to the Bureau of Labor Statistics’ Consumer Price Index.

CARGO COSTS MOUNT

U.S. sea-borne imports hit $6.4 billion in January, up 159% from a year earlier, according to S&P Global Market Intelligence’s Panjiva unit and S&P Global Platts. That was on top of a similar increase in the fourth quarter.

In recent weeks, the cost of transporting goods from Asia to the U.S. West Coast rose a whopping 200% year-over-year, while rates to the East Coast have more than doubled, data from S&P Global Platts Containers shows.

Port and container shipping executives say the bottlenecks may not dissipate until the second or early third quarter of this year.

Peloton Interactive plans to spend $100 million to expedite deliveries of spin bikes and other equipment. That will require pricier air shipping and expedited ocean freight services, as well as the cost of routing cargo containers away from the Los Angeles/Long Beach port complex – which is suffering record backups.

Transportation- and commodity-related inflation could send costs $70-80 million higher this fiscal year, said David Maura, chief executive of Spectrum Brands, whose products include Kwikset locks, Hot Shot bug spray and George Foreman grills.

Parts shortages also contribute to the pain.

Kia Motors America is flying in computer chips due to a global shortage, spokesman Rick Douglas said.

La-Z-Boy last week said short supplies of components for its most-lucrative powered seating hit its sales mix.

“It feels like whack-a-mole. You figure out one (supply chain issue), get it fixed – and another piece comes up,” said Lifetime Products CEO Richard Hendrickson, whose Utah-based sporting goods company imports some items from China.

(Reporting by Lisa Baertlein; Additional reporting by Timothy Aeppel and Melissa Fares in New York, Richa Naidu in Chicago, Jonathan Saul in London and Nivedita Balu in Bengaluru; Editing by Dan Grebler)

EU set to impose tariffs on $4 billion U.S. goods next week

By Philip Blenkinsop

BRUSSELS (Reuters) – The European Union is likely to impose tariffs on $4 billion of U.S. imports including planes and plane parts next week in retaliation over U.S. subsidies for aircraft maker Boeing, EU diplomats said on Friday.

A majority of EU governments have already backed the tariffs, which are expected to be put in place after a meeting of EU trade ministers on Monday.

“I would expect the tariffs to be imposed next Tuesday or Wednesday,” an EU diplomat said.

The move will echo U.S. tariffs on European goods over subsidies for Boeing’s rival Airbus. Combined, the two cases represent the world’s largest ever corporate trade dispute.

The World Trade Organization gave the European Union the right to impose counter-measures, but the United States said that there was no legal basis this and that, if the bloc chose to impose measures, it “will force a U.S. response”.

The move puts the long-running transatlantic trade dispute on the radar of the next U.S. administration, whoever wins the closely fought election.

The European Union could have acted at the end of October, just days before the U.S. election, but chose to delay in order to avoid potentially impacting the outcome. EU governments formally cleared the move on Tuesday, election day.

Tariffs are due to be placed on U.S. planes and parts, fruits, nuts and other farm produce, processed products such as orange juice, certain spirits and a range of other goods, from construction equipment to casino tables, diplomats said.

The European Commission said it was finalizing the process to exercise its retaliation rights in case no agreed solution could be found with Washington, including the immediate suspension of U.S. measures.

The United States Trade Representative had no immediate comment.

The United States already has tariffs on $7.5 billion of EU and British goods in relation to a parallel case over subsidies for European plane maker Airbus.

Chris Swonger, president and CEO of the Distilled Spirits Council of the U.S., said any tariffs on spirits would further devastate an industry that has already seen a 41% drop in U.S. whisky exports to Europe due to previous EU tariffs.

The tariffs also hand Britain, which left the EU this year, a delicate decision about whether to join its neighbors in imposing tariffs at a time when it is in the midst of trade negotiations with both the United States and European Union.

Britain’s trade minister said last week it would “keep all options open” to ensure it can respond to U.S. tariffs on Scotch whisky and other industries. Britain is one of four Airbus partner nations alongside France, Germany and Spain.

(Reporting by Philip Blenkinsop, additional reporting by Andrea Shalal in Washington, Editing by Tim Hepher)

Canada to impose retaliatory tariffs on C$3.6 billion worth of U.S. goods

By David Ljunggren

OTTAWA (Reuters) – Canada will slap retaliatory tariffs on C$3.6 billion ($2.7 billion) worth of U.S. aluminum products after the United States said it would impose punitive measures on Canadian aluminum imports, a senior official said on Friday.

Deputy Prime Minister Chrystia Freeland told a news conference the countermeasures would be put in place by Sept. 16 to allow consultations with industry.

U.S. President Donald Trump on Thursday moved to reimpose 10% tariffs on some Canadian aluminum products to protect U.S. industry from a “surge” in imports. Canada denies any impropriety.

“A trade dispute is the last thing anyone needs – it will only hurt an economic recovery on both sides of the border. However, this is what the U.S. administration has chosen to do,” said Freeland.

“We do not escalate and we do not back down,” she said later, describing the U.S. decision as unjust and absurd.

The Canadian list of goods that might be subject to tariffs include aluminum bars, plates, household articles, refrigerators, bicycles and washing machines.

It is the second time in two years that Canada has struck back at Trump over trade. In 2018, Ottawa slapped tariffs on C$16.6 billion ($12.5 billion) worth of American goods ranging from bourbon to ketchup after Washington imposed sanctions on Canadian aluminum and steel.

Canadian officials may be calculating that the measures will be short-lived. An Ottawa source briefed by Prime Minister Justin Trudeau’s office said Canadian officials are increasingly sure that Trump will lose the Nov. 3 presidential election to Democratic presidential candidate Joe Biden.

Trump acted just weeks after a new continental trade pact between the United States, Canada and Mexico took effect. The North American economy is highly integrated and Canada sends 75% of all its goods exports to the United States.

The premier of Ontario, Canada’s most populous province, said earlier on Friday that he had encouraged Freeland to impose tariffs on as many U.S. goods as possible.

“For the President to come and attack us during these times, during a pandemic when we need everyone’s support, is totally unacceptable,” Doug Ford told a news conference.

(Reporting by David Ljunggren; Editing by Chris Reese and Dan Grebler)

U.S., China set to sign massive purchases deal, easing trade war

By David Lawder

WASHINGTON (Reuters) – U.S. President Donald Trump and Chinese Vice Premier Liu He will sign an initial trade deal on Wednesday that will roll back some tariffs and see China boost purchases of U.S. goods and services, defusing an 18-month conflict between the world’s two largest economies.

Liu said the two sides will work more closely together to obtain tangible results and achieve a win-win relationship despite differences in their political and economic models, China’s official Xinhua news agency reported on Wednesday.

U.S. officials called the deal a huge win that marked a significant shift in Washington’s relations with China, but said it included a tough enforcement measure that could trigger renewed tariffs if Beijing does not live up to its promises.

The Phase 1 agreement caps a trade war marked by tit-for-tat tariffs that has hit hundreds of billions of dollars in goods, roiling financial markets, uprooting supply chains and slowing global growth.

Some analysts and economists have questioned whether the outcome of the drawn-out talks justified that economic pain.

Trump and Liu, who led the Chinese side in the trade talks with Washington, are scheduled to sign the 86-page Phase 1 deal at a White House event at 11:30 a.m. EST (1630 GMT) before over 200 invited guests from business, government and diplomatic circles.

It is not clear at this time whether the entire document will be released on Wednesday.

Trump, who entered the White House in 2017 vowing to rebalance global trade in favor of the United States, has already begun touting the deal as a pillar in his 2020 re-election campaign, calling it “a big beautiful monster” at a rally in Toledo, Ohio last week.

“Our farmers will take it in. I keep saying, ‘Go buy larger tractors, go buy larger tractors,'” Trump said.

The centerpiece of the deal is a pledge by China to purchase an additional $200 billion worth of U.S. farm products and other goods and services over two years. That will help reduce the bilateral U.S. trade deficit in goods, which peaked at $420 billion in 2018. The United States had a small services trade surplus with China of $40.5 billion in 2018.

Top White House economic adviser Larry Kudlow told Fox News the agreement would add 0.5 percentage point to U.S. gross domestic product growth in both 2020 and 2021.

Kudlow said the deal called for China to buy an additional $75 billion worth of U.S. manufactured goods over the two-year period. A source told Reuters this week that would include aircraft, autos and car parts, agricultural machinery and medical devices.

Beijing will boost energy purchases by some $50 billion and services by $40 billion, mostly in the financial sector, Kudlow said.

The Reuters source said agricultural purchases will get a $32 billion lift over the two years, compared to a 2017 baseline of U.S. exports to China.

When combined with the $24 billion in 2017 farm exports, the $16 billion annual increase approaches Trump’s goal of $40 billion to $50 billion in annual agricultural sales to China.

China will significantly increase imports of U.S. soybeans after the Phase 1 deal is signed, the Global Times reported on Wednesday, citing comments from a senior Chinese economist at a state think tank.

Wang Liaowei, senior economist at the China National Grain and Oils Information Center, which is under the National Food and Strategic Reserves Administration, also told the paper that imports of U.S. products such as pork and cotton could also see a jump.

Although the deal could be a big boost to farmers, planemaker Boeing <BA.N>, U.S. automakers and heavy equipment manufacturers, some analysts question https://af.reuters.com/article/commoditiesNews/idAFL4N29J26S China’s ability to divert imports from other trading partners to the United States.

“I find a radical shift in Chinese spending unlikely. I have low expectations for meeting stated goals,” said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis. “But I do think the whole negotiation has moved the football forward for both the U.S. and China.”

TARIFFS TO STAY

The Phase 1 deal, reached in December, canceled planned U.S. tariffs on Chinese-made cellphones, toys and laptop computers and halved the tariff rate to 7.5% on about $120 billion worth of other Chinese goods, including flat panel televisions, Bluetooth headphones and footwear.

But it will leave in place 25% tariffs on a vast, $250 billion array of Chinese industrial goods and components used by U.S. manufacturers.

U.S. Treasury Secretary Steven Mnuchin told CNBC on Wednesday the deal would boost the U.S. economy, and that Washington could lower tariffs as part of a Phase 2 agreement that would address complex issues such as cybersecurity.

Mnuchin said the U.S. relationship with China was complicated and Washington would continue to raise humanitarian and national security concerns with Beijing in separate discussions. “You have to negotiate different pieces at different times,” he said.

He said Chinese telecom equipment maker Huawei Technologies Co Ltd was not a “chess piece” in the economic negotiations.

China’s Global Times said the Phase 2 discussions may not start anytime soon.

Evidence is mounting that tariffs have raised input costs for U.S. manufacturers, eroding their competitiveness.

Diesel engine maker Cummins Inc <CMI.N> said on Tuesday that the deal will leave it paying $150 million in tariffs for engines and castings that it produces in China.

The company issued a tepid statement of approval on Tuesday: “We believe this is a positive step and remain optimistic that all parties will remain at the table in order to create a pathway to eliminate all of the instituted tariffs.”

Lighthizer and Mnuchin insisted there were no side agreements to remove more tariffs after the November U.S. elections. Mnuchin on Wednesday reiterated that Trump could consider easing tariffs if the two countries move quickly to seal a Phase 2 follow-up agreement.

CORE ISSUES UNTOUCHED

The Phase 1 deal includes pledges by China to forbid the forced transfer of American technology to Chinese firms as well as to increase protections for U.S. intellectual property.

But it stops well short of addressing the core U.S. complaints about China’s trade and intellectual property practices that prompted the Trump administration to pressure Beijing for changes in early 2017.

The deal contains no provisions to rein in rampant subsidies for state-owned enterprises, which the administration blames for excess capacity in steel and aluminum and says threaten industries from aircraft to semiconductors.

It also fails to address digital trade restrictions and China’s onerous cybersecurity regulations that have hobbled U.S. technology firms in China.

China has agreed in the Phase 1 deal to open its financial services sector more widely to U.S. firms, and to refrain from deliberately pushing down its currency to gain a trade advantage, the latter prompting Treasury to drop its currency manipulator label on Beijing.

(Additional reporting by Lisa Lambert, Andrea Shalal, Echo Wang, Alexandra Alper, and Herb Lash in New York, and Se Young Lee and Stella Qui in Beijing; Editing by Simon Cameron-Moore and Paul Simao)