Roving Periscope: As realities dawn, Trump tries to apply balm to wounds!
Virendra Pandit
New Delhi: With complications to his tariff announcements and threats surfacing, amid some of his pressure tactics working, US President Donald Trump has paused tariffs, and granted US automakers a month’s exemption on Canadian and Mexican imports, even as Washington also forced Ukraine President Volodymyr Zelenskyy to “apologize” and the European Union to consider hiking defense budgets.
The media reported on Thursday that President Trump announced a one-month exemption on new tariffs imposed on imports from Mexico and Canada for US automakers, responding to concerns that the tariffs could harm domestic manufacturing. However, worries persist that the newly launched trade war could crush domestic manufacturing.
The pause came after he spoke with leaders of the “Big 3” automakers—Ford, General Motors and Stellantis—the White House Press Secretary, Karoline Leavitt, said on Wednesday.
Asked if 30 days was enough for the auto sector to prepare for the new taxes, Leavitt said Trump was blunt with the automakers seeking an exemption: “He told them that they should get on it, start investing, start moving, shift production here to the United States of America where they will pay no tariff.” Shares of big US, Asian and European automakers jumped as much as 6 percent after the announcement.
Pausing the 25 percent taxes on autos traded through the North American free trade pact, the US-Mexico-Canada Agreement (USMCA), would only delay a broader reckoning to take place on April 2, when Trump might impose broad “reciprocal” tariffs to match the taxes and subsidies that other countries charge on imports.
Leavitt said the President is “open” to hearing requests from other industries seeking exemptions as well, hinting at more compromises.
The White House repeatedly insisted that it would not grant exemptions. However, the sudden turnaround reflects the economic and political problems being created by Trump’s fresh tariffs. While he claimed that these would enrich the US, his plans to tax imports have alienated allies and caused anxiety about slower economic growth, accelerating inflation, and jobloss.
Trump has long promised to impose tariffs, but his 40-odd days in the White House involved aggressive threats, surprise suspensions and left the allies unclear at what he is actually trying to achieve. Considering his administration’s recent statements, the tariffs on Canada, Mexico and China imposed on Tuesday are about stopping illegal immigration, blocking fentanyl smuggling, closing the trade gap, balancing the federal budget and some nations showing more respect for Trump.
On Wednesday, he spoke with the ‘outgoing’ Canadian Prime Minister Justin Trudeau, as US Commerce Secretary Howard Lutnick had suggested that the administration was looking to meet Canada and Mexico “in the middle.” But Trudeau refused to lift Canada’s retaliatory tariffs so long as Trump continues with his new taxes on Canadian imports.
Ontario Premier Doug Ford said the auto sector in the US and Canada could start shutting down the assembly lines in the US and in Ontario after 10 days.
Besides his upcoming reciprocal tariffs that could strike the European Union, India, Brazil, South Korea, Canada and Mexico, Trump wants to tax imports of computer chips, pharmaceutical drugs and autos. He also closed exemptions on his 2018 steel and aluminium tariffs and is looking into tariffs on copper as well.
In his Tuesday night speech to a joint session of US Congress, Trump tried to minimize the financial pain at home as a “ little disturbance.” “It may be a little bit of an adjustment period,” he said after claiming that farmers would benefit from reciprocal tariffs levied on countries having tariffs on US exports. “You have to bear with me again and this will be even better.” He predicted that tariffs will lead to greater investment inside the US, creating more factory jobs and boosting growth in the long term.
On Tuesday, Trump put 25 percent taxes on imports from Mexico and Canada, taxing Canadian energy products such as oil and electricity at a lower 10 percent rate, and also doubled the tariff on China to 20 percent.
His administration claimed the tariffs are about stopping the smuggling of drugs such as fentanyl, with aides asserting that this is about a “drug war” rather than a “trade war.” But the fact is that US customs agents seized only 43 pounds (19.5 kg) of fentanyl at the northern border the last fiscal year.
Trudeau said on Tuesday that his country would plaster tariffs on over USD 100 billion worth of American goods over 21 days, stressing that the US had abandoned a long-standing friendship.
“Today, the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said on Tuesday.
Mexico indicated it would announce its own countermeasures on Sunday.
Beijing responded with tariffs of up to 15 percent on a wide array of US farm exports, and expanded the number of US companies subject to export controls and other restrictions by about two dozen.
