If Trump starts a trade war with Mexico and Canada, where will Americans get all their stuff from?
New York CNN —
President-elect Donald Trump appears keen on launching a simultaneous trade war with America’s three biggest trade partners: Mexico, China and Canada.
The price US consumers stand to pay for it could potentially be eased if companies move away from these countries. But where exactly will they go?
Those three nations alone accounted for more than 40% of the total value of all goods the US imported last year, according to federal trade data.
Trump recently pledged to impose an additional 10% tariff on Chinese imports on top of existing ones. On the campaign trail, he also floated a 60% across-the-board tariff on Chinese goods. For Mexico and Canada, he said he plans to slap a new 25% tariff on all imports the very day he’s inaugurated.
In Trump’s ideal world, these higher tariffs would directly boost domestic manufacturing, since US businesses would be able to avoid tariffs entirely. To further incentivize companies to move production to the US, Trump has also dangled tax breaks.
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But none of that is likely to cause a meaningful change in domestic production, said Daniel Anthony, managing director at Trade Partnership Worldwide, an economic research group. When Trump imposed steeper tariffs on Chinese goods in his first term, “very little production came back to the United States,” he said.
That was partly due to a lack of readily available infrastructure to make certain goods in the US. But even if that infrastructure had existed, moving manufacturing to the US mostly translates to much higher production costs that directly feed to higher prices consumers pay.
So, if tariffs on Chinese,