Roving Periscope: Trump tempest roils the US and world; China moves to the WTO
Virendra Pandit
New Delhi: Presiding over chaos at home and overseas, America’s non-conventional President Donald Trump’s fresh steps threaten a government shutdown in the US and engage Washington in an unprecedented global trade war for the first time in history.
The US itself is now on the verge of shutdown at Trump pushed for unilateral budget cuts. This he had done before as well. The longest government shutdown in US history was in his first term (2017-21), which lasted 35 days from December 2018 to January 2019. It stemmed from Trump’s demand for funding to build a controversial wall along the US-Mexico border
The media reported on Tuesday that his tariffs have panicked economies in the US and worldwide.
His 25 percent tariffs on Canadian and Mexican imports took effect on Tuesday (March 4), sparking fears of an imminent North American trade war. He cited fentanyl trafficking, illegal immigration, and trade imbalances as key reasons behind the move, but worried economists warned of inflation risks and supply chain disruptions as a chain reaction.
Canada and Mexico, flanking the US in the north and south, swiftly responded. Canada announced a matching 25 percent tariffs on C$155 billion worth of US goods it imports, with C$30 billion in immediate effect. Mexico is also preparing countermeasures, its President Claudia Sheinbaum announced.
A furious China also escalated tensions, imposing 15 percent tariffs on imports of US chicken, wheat, corn, and cotton, and an additional 10 percent tariffs on soyabeans, pork, beef, and dairy from March 10. Beijing strongly opposed US tariff hikes, and warned of further actions. With trade tensions soaring, global markets brace for volatility, higher consumer prices, and economic fallout, as Trump vows reciprocal tariffs to match foreign levies.
China also decided to add 10 US firms to the country’s’ unreliable entity list’ and take corresponding measures against them. They include a number of companies linked to defence and security besides AI, aviation, IT and “dual-use” items that carry both civilian and military applications. In addition, Beijing initiated legal action against the US under the World Trade Organisation (WTO) dispute settlement mechanism in terms of the latter’s latest tariff increase on Chinese products, its Ministry of Commerce said in Beijing on Tuesday.
Responding to these counter-moves, President Trump on Monday encouraged American farmers to be prepared to sell their goods more at home in view of his upcoming tariffs on ‘external products.’
Taking to Truth Social, his private social media platform, he wrote, “To the Great Farmers of the United States: Get ready to start making a lot of agricultural products to be sold INSIDE of the United States. Tariffs will go on external products on April 2nd. Have fun!”
Early last month, Trump announced 25 percent tariff hike on products imported from Canada and Mexico. However, on February 4, he paused the tariffs for a month, stating that he had “secured new commitments from the two countries to improve border security.”
However, on Monday, he claimed there was “no room left” for the two countries and the “tariffs are all set and are going to effect” on March 4 as planned.
Trump did not mention which items would be affected by his new order or whether there would be any exceptions. However, data from the United States Department of Agriculture (USDA) shows that fruits, vegetables, and nuts are likely to take a hit from the new tariffs. These products account for half of agricultural exports that enter the American market.
In 2024, Mexico exported to the US USD 8.3 billion worth of fresh vegetables such as tomatoes, peppers, and cucumbers, according to a CNN report. Its fresh fruit exports to the US totalled USD 9 billion, with avocados alone accounting for USD 3.1 billion. Besides, Mexican beer exports to the US were valued at USD 5.9 billion, while tequila and other distilled spirits contributed another USD 5 billion.
From Canada, key agricultural imports include dairy products such as milk, cheese, and butter, as well as meat products like beef and pork. The US also imports grains and oilseeds, including wheat, barley, and canola oil. A 25 percent tariff on these goods would likely lead to increased grocery prices as retailers pass on the higher costs to consumers.
President Trump is roiling not only the world economy but also the American one.
While federal funding expires on March 14, negotiations between Republicans and Democrats in Congress have stalled, once again raising the risk of a government shutdown since December 2024. The US media reported that President Trump’s efforts to assert control over government spending, bypass congressional authority, and implement widespread budget cuts have exacerbated the deadlock.
This is not the first time the US government faces the threat of closure under his leadership. In December 2024, the Congress rushed to approve a last-minute funding bill to prevent a shutdown. However, a bipartisan deal collapsed after then-President-elect Trump and technology billionaire Elon Musk urged Republicans to reject it, prompting US House of Representatives Speaker Mike Johnson to renegotiate at the last minute.
At the heart of this dispute is the President’s decision to override spending laws passed by the US Congress, suspend foreign aid, and initiate mass layoffs of federal workers. Democrats argue that these actions would violate constitutional provisions granting lawmakers control over government spending. They demanded guarantees that Trump, alongside Russell Vought, Director of the United States Office of Management and Budget, and close adviser Elon Musk, will adhere to any new funding agreement instead of unilaterally slashing programmes or terminating contracts.
Trump, however, asserted that his administration has the authority to withhold funds allocated by the US Congress, and defended actions as a necessary effort to reduce government waste, with the Musk-led US Department Of Government Efficiency (DOGE), a newly empowered federal agency, leading the charge in terminating contracts and cutting jobs.
Speaker Johnson sided with Trump, rejecting Democrats’ demands for spending assurances as a “gross separation-of-powers violation”. Over the last weekend, Republican negotiators walked away from talks aimed at determining the overall federal budget for the remainder of the US 2025 fiscal year, which ends on September 30.
The Trump administration has already dismissed or offered buyouts to 100,000 federal workers, with officials directing agencies to brace for more layoffs. As of last year, the government employed approximately 2.3 million civilian workers, and further cuts could impact key services across various federal departments.
If a spending agreement is not reached by the March 14 deadline, the government will be forced to furlough these employees and shut down ‘nonessential’ operations.
Essential services such as law enforcement and national security would continue, but financial regulation, national park maintenance, and other government functions would come to a halt.
On Tuesday night, President Trump will address to a joint session of Congress, where he is expected to outline his administration’s budget priorities. Democrats insist they will not approve any new spending bill unless it includes safeguards against further unilateral cuts by the White House. As negotiations remain in limbo, the possibility of a government shutdown looms large.
