In what seemed like a baffling move, President Trump announced he would levy a 25% blanket tariff against Canada and Mexico and a 10% tariff on all Chinese imports. Trump claimed these moves were necessary to punish Canada and Mexico for not doing enough to stop the flow of fentanyl and illegal immigrants into the United States.

The announcement was met with considerable public outcry. Why attack our closest neighbors and most important trade partners? Why risk tanking the economies of all three countries and driving up the price of goods for consumers?

The move led many consumers in Canada and Mexico to boycott American products, resulted in the announcement of retaliatory tariffs and bans on American imports, such as alcohol from “red states,” and even motivated Canadian hockey fans to boo the U.S. national anthem at NHL games.

Less than 24 hours later, Trump was already declaring victory in the trade war he started by claiming that he was pausing the announced tariffs because Canada and Mexico agreed to take specific actions to prevent fentanyl trafficking and illegal immigration into the United States. However, many people assert that Mexico and Canada merely made a show of implementing steps they were either already doing or had agreed to do and Trump accomplished nothing beyond destroying the good relations we had previously enjoyed with our neighbors and allies.

What was the point of the tariffs?

If Trump was so willing to back off the tariffs on Canada and Mexico, why did he implement them in the first place? Trump campaigned heavily on the idea of implementing tariffs as a solution to addressing a myriad of economic woes, including inflation.

Experts cautioned that tariffs were likely to drive prices even higher and would not result in more jobs in the United States, but Trump’s cult was not swayed. While the tariffs on Canada and Mexico are on pause, the 10% tariff on China is likely to result in higher prices for a variety of goods.

Why China, Canada, and Mexico?

Trump announced a plan to implement tariffs on many countries. Why did he start with China, Canada, and Mexico? China and Mexico were not super surprising given that relations between the U.S. and China have long been strained for a variety of reasons and “illegal” immigration from Mexico has been an ongoing topic of concern for decades.

However, Canada was a bit of a shock and even Mexico isn’t an obvious target given that we have a standing trade agreement with them. The reasons for targeting these countries could be multi-faceted.

The first is that as three of our largest trade partners, tariffs involving these countries could stand to make the most impact; however, most economists argue that impact is likely to be negative. It seems more likely that Trump’s goal is to coerce these countries into negotiating more favorable trade terms with the U.S.

Another factor could be that citing national security risks, illegal immigration, and drug trafficking allows Trump to invoke the emergency powers granted to him by the International Emergency Economic Powers Act. This made it possible for him to levy these tariffs without going through Congress, even though his allegations against Canada were extremely weak.

What happens now?

It seems clear from Trump’s rambling communications that combating drugs and illegal immigration was just an excuse to invoke his “emergency powers” to implement these tariffs without Congressional approval. His end goal is likely attempting to strongarm Canada and Mexico into renegotiating their trade agreements with the United States.

Meanwhile, the tariffs on China are already creating havoc, with the USPS announcing and then rescinding orders to stop all packages into the United States from China and Hong Kong due to the lack of guidance on how it is to enforce the new tariffs. While Trump did impose tariffs on some Chinese goods in his first term, they were not as wide-reaching and didn’t impact the growing market where retailers such as Temu and Shein directly ship goods to U.S. customers. As a result, the USPS may be in the unique position of implementing collection procedures directly involving consumers, rather than just importers of goods for resale.

How will this impact us going forward?

As of now, the 10% tariff is still in place on Chinese goods, which will likely result in higher prices for American consumers and may impact the job market as China imposes retaliatory tariffs on American exports. Trump’s attempts to bully other countries into renegotiating trade agreements will almost certainly make it more difficult to come to agreements with other countries on trade and other important issues.

Trump also runs the risk of weakening alliances and pushing our allies to band together against us. These issues are made worse by Trump’s bizarre threats to seize Greenland and Gaza and annex Canada.

While we temporarily got a reprieve on the disastrous tariffs on Canada and Mexico, Trump’s antics have already cost us valuable goodwill and begun an escalating trade war with China that isn’t likely to end any better than his first disastrous trade war with China. All that remains to be seen is whether these latest actions are a smokescreen for Elon’s antics, the fickle whims of a Mad King, or something more sinister.