Politics

Trade War Enters New Round as Mexico, Canada, and EU Hit USA with Tariffs

Canada, the European Union, and Mexico are moving quickly to slap the United States with tariffs in response to tariffs first levied by the United States. Last week, the Trump administration hit Canada, the European Union, and Mexico with hefty steel and aluminum tariffs. In response, aforementioned countries have already pushed forward with tariffs of their own.

The EU has already filed a formal complaint with the World Trade Organization and has also installed over $4 billion worth of American goods with tariffs. The EU’s tariffs are targeting classic American goods, including motorcycles, motor boats, and jeans. In total, 160 different American products are facing tariffs ranging from 10 to 50 percent.

However, the tariffs won’t come into effect for three years or until after the WTO rules in the EU’s favor. The EU was already well-prepared to retaliate and claims that the tariffs are “dollar for dollar” in response to America’s tariffs. The EU has labeled American tariffs as unilateral and illegal, setting the stage for what might be a tough fight at the WTO.

Mexico is also pushing forward with tariffs on roughly $3 billion worth of goods. Again, classic American products are in the crosshairs. A range of agricultural products, including apples, potatoes, pork, and cheese, are being targeted. American bourbon is also being hit with tariffs, prompting famed whiskey maker Jack Daniels to warn that its financial projections may be impacted.

In total, just over 1 percent of American exports to Mexico are being targeted. Mexico is the second largest destination of American exports. However, Mexico exports far more to the USA than it imports. In total, the United States suffered from a trade deficit of just under $71 billion in 2017.

The biggest immediate battle, besides China, will likely be with Canada. America’s neighbor to the north has slapped tariffs of up to 25 percent on roughly $13 billion worth of American goods. As with Mexico, the United States suffers from a trade deficit with Canada; however, the deficit is much narrower. For all of 2017, the United States suffered a trade deficit of just over $17 billion. The USA sent roughly $282 billion worth of goods to Canada, while Canada sent just under $300 billion to the USA. Canada is the largest destination for American exports.

So far, markets have shrugged off the simmering trade war, with the Dow Jones Industrial Average (DJIA) and other key indices rising. European markets have been holding steady, and Asia’s stock markets continue to rise. While the tariffs are eating up news headlines, they actually represent a small amount of global trade.

Certain companies and industries will be impacted, but so far none of the tariffs have been large or diverse enough to affect trade overall. Right now, it seems that governments are more keen to send messages rather than disrupt trade. However, the trade war is a slippery slope. If countries continue to slap tariffs on each other, markets may get jittery and the economic impact could be more widespread.

If the ongoing spat with China is any indication, the United States, Canada, the EU, and Mexico will likely all take a step back. While China responded with tariffs of its own in recent weeks, both countries have begun negotiations to avoid further disputes. Most likely, the US and its trade rivals will avoid an all-out war.

The opinions expressed here by contributors are their own and are not the view of OpsLens which seeks to provide a platform for experience-driven commentary on today's trending headlines in the U.S. and around the world. Have a different opinion or something more to add on this topic? Contact us for guidelines on submitting your own experience-driven commentary.
Brian Brinker

Brian Brinker is a political consultant and has an M.A in Global Affairs from American University.

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