No winners in looming trade war with Mexico, Canada and China

Consumers could see price hikes within days if President Trump follows through on his intent to raise tariffs on all three of America’s biggest trading partners. Trump has vowed to impose a 25% tariff on imported goods from Mexico and Canada, which would begin Tuesday, and to double tariffs on those from China to 20%.

Gustavo Flores-Macias is a professor of government and public policy at Cornell University, where he focuses on the politics of economic reforms. He says the effects of tariffs on imports from Canada and Mexico are already felt, and the consequences would only increase in the coming weeks.

Flores-Macias says: “Due to the uncertainty surrounding the tariffs, the stock market has erased the gains from the ‘Trump bump’ following the presidential election, and the expected upward pressure on prices is giving investors pause.

“The automobile sector, in particular, is likely to see considerable negative consequences, not only because of the disruption of the supply chains that crisscross the three countries in the manufacturing process, but also because of the expected increase in the price of vehicles, which can dampen demand.

“While Canada and Mexico have sought to find a diplomatic solution to the White House's demands regarding undocumented migration and fentanyl trafficking, both countries are likely to retaliate in kind even if they stand more to lose economically. The U.S. economy is larger and can better absorb the negative consequences of a trade war, but a simultaneous trade war with its three main trade partners (once tariffs against China are included) will affect all parties negatively.”

For interviews contact Adam Allington, cell (231) 620-7180, adam.allington@cornell.edu.