PALM BEACH, Fla. (AP) — President Donald Trump said Sunday that Americans could feel “some pain” from the emerging trade war triggered by his tariffs against Canada, Mexico and China, and claimed that Canada would “cease to exist” without its trade surplus with the United States.
“Canadians are perplexed,” the country's U.S. ambassador said. “We view ourselves as your neighbor, your closest friend, your ally.”
The trade penalties that Trump signed Saturday at his Florida resort caused a mix of panic, anger and uncertainty, and threatened to rupture a decades-old partnership on trade in North America while further straining relations with China. But by following through on a campaign pledge, Trump may have simultaneously broken his promise to voters in last year’s election that his administration could quickly reduce inflation.
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump said in a social media post. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
His administration has not said how high that price could be or what improvements would need to be seen in stopping illegal immigration and the smuggling of fentanyl to merit the removal of the tariffs that Trump imposed under the legal justification of an economic emergency. The tariffs are set to launch Tuesday.
“If prices go up, it’s because of other people’s reactions to America’s laws,” his homeland secretary, Kristi Noem, said on NBC's “Meet the Press.”
In his Truth Social post, Trump took particular aim at Canada, which responded with retaliatory measures. Trump is placing a 25% tariff on Canadian goods, with a 10% tax on oil, natural gas and electricity. Canada is imposing 25% tariffs on more than $155 billion on U.S. products, including alcohol and fruit.
Trump railed against Canada's trade surplus with the United States: “We don’t need anything they have. We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use.”
Despite Trump's claim that the U.S does not need Canada, one-quarter of the oil that the America consumes per day is from its ally to the north.
Trump contended that without that surplus, "Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”
Canada's ambassador to Washington, Kirsten Hillman, has said the U.S. had a $75 billion trade deficit with Canada last year, but noted that one-third of what Canada sells into the U.S. is energy exports and that there is a deficit when oil prices are high. About 60% of U.S. crude oil imports are from Canada.
Prime Minister Justin Trudeau is encouraging Canadians to buy more Canadian goods, and says Trump's moves will only cause pain across North America. More than 75% of Canada's exports go to the U.S.
Canadians “just don’t understand where this is coming from ... and probably there’s a little bit of hurt, right?” Hillman told ABC's “This Week” on Sunday.
Mexico's president, Claudia Sheinbaum, also announced new tariffs and suggested the U.S. should do more within its own borders to address drug addiction. She and Trudeau spoke after Trump's announcement and agreed “to enhance the strong bilateral relations” between Canada and Mexico, according to the prime minister's office.
The Chinese government said it would take steps to defend its economic interests and intends to file a lawsuit with the World Trade Organization.
For Trump, the open question is whether inflation could be a political pressure point that would cause him to back down. As a candidate, Trump repeatedly hammered Democrats over the inflation under President Joe Biden that resulted from supply chain issues during the coronavirus pandemic, the Biden administration’s own spending to spur the recovery and Russia’s invasion of Ukraine.
Trump said his previous four years as president had low inflation, so the public should expect the same if he came back to the White House. But he also said specifically that higher inflation would stagger the U.S. as a nation, a position from which he now appears to be retreating with the tariffs.
“Inflation is a disaster,” he said at a Philadelphia campaign rally. “It’s a country-buster. It’s a total country-buster.”
Larry Summers, treasury secretary under President Bill Clinton, said the tariffs were “a self-inflicted wound to the American economy."
“Inflation might go up over the next nine months by as much ... as 1 percent, just at a moment when we were trying to bring it down,” he told CNN's “Inside Politics.”
He added that “on the playground or in international relations, bullying is not an enduringly winning strategy. And that’s what this is.” And the ultimate winner, Summers suggested, would be Chinese leader Xi Jinping because “we’ve moved to drive some of our closest allies into his arms” and "we're legitimating everything he’s doing by violating all the international norms that we set up.
Outside analyses make clear that Trump's tariffs would hurt the voters that he intended to help, meaning that he might ultimately need to find a resolution.
An analysis by the Budget Lab at Yale shows, if the tariffs were to continue, an average U.S. household would lose roughly $1,245 in income this year, in what would be the overall equivalent of a more than $1.4 trillion tax increase over the next 10 years.
Goldman Sachs, in a Sunday analyst note, stressed that the tariffs go into effect on Tuesday, which means they're likely to proceed “though a last-minute compromise cannot be completely ruled out.”
The investment bank concluded that because of the possible economic damage and possible conditions for removal that “we think it is more likely that the tariffs will be temporary but the outlook is unclear.”
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Associated Press writer Rob Gillies in Toronto contributed to this report.
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