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-Editorial
President-Elect Donald Trump announced sweeping measures to address what he described as an “unprecedented crisis” at the U.S. borders with Mexico and Canada. Trump pledged to impose a 25% tariff on all products imported from the two neighboring countries starting January 20, 2025—his first day in office.
According to Trump, the tariffs will remain in place until Mexico and Canada take decisive action to halt the flow of illegal drugs and undocumented migrants into the United States. “Thousands of people are pouring through Mexico and Canada, bringing crime and drugs at levels never seen before,” he stated. Trump specifically cited a caravan of migrants from Mexico, describing it as “unstoppable” and emblematic of what he called “open border policies.”
The announcement also extends to China, which Trump accused of failing to deliver on promises to curb fentanyl exports. He proposed an additional 10% tariff on Chinese goods until the country implements stricter penalties against drug traffickers. “Representatives of China assured me they would enforce their maximum penalty—death—for drug dealers,” Trump said, adding that this promise has not been fulfilled.
Trump framed these tariffs as critical to U.S. national security, arguing that both neighboring countries and China possess the resources to “easily solve this long-simmering problem.” He concluded with a direct call to action: “It is time for them to pay a very big price.”
Mexico’s President Claudia Sheinbaum Pardo issued a strong response to U.S. President-elect Donald Trump, rejecting his proposal to impose tariffs on Mexican goods to address migration and drug consumption.
In a letter read during her morning press conference, Sheinbaum emphasized the importance of cooperation over confrontation: “A tariff will lead to retaliation, risking shared enterprises and economic stability. Companies like General Motors and Ford, which have operated in Mexico for decades, would face unnecessary risks, causing inflation and job losses in both nations.”
Sheinbaum highlighted Mexico’s efforts to manage migration, noting a 75% reduction in border encounters since late 2023, partially due to legal appointment programs like the U.S. CBP One initiative. She credited these policies with ending migrant caravans at the border.
“I hope our teams can meet soon to foster understanding and advance the shared interests of our nations,” Sheinbaum concluded, reaffirming her commitment to a cooperative relationship.
The tariffs imposed during Donald Trump’s presidency (2017-2021) aimed to reshape trade relationships, protect domestic industries, and address long-standing trade imbalances. However, their economic and political impacts were widely debated. Economists, analysts, and policymakers largely agreed that the tariffs had mixed to negative effects on the U.S. economy and trade relationships, particularly with China and key allies.
The Trump administration implemented tariffs on steel, aluminum, and a wide range of Chinese goods. Studies showed that these tariffs raised the prices of U.S. intermediate goods by 10%-30%, with the increased costs often passed on to consumers. A study in the Journal of Economic Perspectives estimated that by late 2018, these tariffs reduced U.S. real income by $1.4 billion per month and cost consumers $3.2 billion monthly in additional taxes. Another analysis found that washing machine tariffs caused a 12% price hike on washers in the U.S.
For businesses, particularly manufacturers, tariffs increased production costs. A Federal Reserve study concluded that steel tariffs alone led to 0.6% fewer manufacturing jobs—approximately 75,000 lost positions. This contrasted with the administration’s goal of boosting domestic production and employment.
Agricultural exports, a critical sector of the U.S. economy, faced severe consequences. Retaliatory tariffs, particularly from China, led to a sharp decline in exports. Data from the American Farm Bureau Federation revealed a drop from $19.5 billion in agricultural exports to China in 2017 to $9.1 billion in 2018—a 53% reduction.
The Congressional Budget Office (CBO) estimated that tariffs reduced U.S. real GDP by 0.5% in 2020, leading to an average household income loss of $1,277. The National Taxpayers Union warned that the cumulative tariffs represented the largest post-war tax increase.
While tariffs targeted China’s trade practices, they had limited success in prompting U.S. companies to leave China. Less than 1% of increased U.S. divestment from China was directly linked to the tariffs. Although bilateral trade declined during 2019 and 2020, trade rebounded by 2021, with U.S.-China merchandise trade nearing pre-tariff levels.
The tariffs, especially those involving retaliatory measures from China and the European Union, disproportionately affected Republican strongholds reliant on manufacturing and agriculture. A study by University of Warwick economists found that retaliatory tariffs caused Republican candidates in affected counties to fare worse in elections, losing up to 2.7 percentage points compared to previous results.
The administration’s strategy of linking tariffs to non-trade issues, such as immigration enforcement, raised concerns about the credibility of U.S. trade commitments. Analysts warned that this precedent could harm the U.S.’s reputation as a reliable trading partner.
