EconomyTrump imposes new tariffs on Mexico, Canada and China
SDA
2.2.2025 - 02:27
President Donald Trump speaks with reporters as he signs executive orders in the Oval Office of the White House. Photo: Evan Vucci/AP/dpa
Keystone
US President Donald Trump is making good on his threat and imposing far-reaching tariffs on goods from Canada, Mexico and China.
Keystone-SDA
02.02.2025, 02:27
SDA
Trump signed the corresponding orders. Accordingly, tariffs of 10 percent will be imposed on all imports from China and 25 percent on imports from neighboring Mexico and Canada. For energy imports from Canada, in turn, a rate of 10 percent is to apply.
There is also a passage in the decrees stating that the tariffs could be increased or extended should the countries react with retaliatory measures - for example with counter-tariffs on goods from the USA. Customs duties are a kind of surcharge on imported goods. They are payable at the border. Trump's decision has serious consequences.
Consequences for Mexico
Mexico is the USA's most important trading partner. No other country exports more to the United States. According to economists, Trump's tariff policy is likely to damage both economies through higher inflation and job losses. Mexico is not ruling out counter-tariffs. More than 80 percent of Mexico's total exports go to the USA. Thousands of companies and millions of jobs depend on this.
Trump is not only criticizing trade imbalances. He is also using punitive tariffs to get Mexico to take tougher action against migration and the drug cartels. He also claims that Chinese companies are circumventing tariffs by investing in Mexico and exporting from there to the USA.
Consequences of the Mexico tariffs for European companies
Tariffs against Mexico are also likely to hit companies from Germany hard, especially the automotive industry. Almost all manufacturers and many suppliers use Mexico as a cheap production location - and serve the US market from there. VW, Audi and BMW have their own factories in the country, while Mercedes-Benz produces in a joint plant with Nissan. And at Audi alone, 98 percent of its cars are exported, 40 percent of them to the USA.
New tariff barriers in the USA are becoming a serious problem here, says industry expert Stefan Hecht from the management consultancy Advyce & Company. Because with an additional surcharge, it is hardly worth sending cars from Mexico to the USA. In response, he expects manufacturers to relocate at least part of their production from Mexico to the USA, where VW, BMW and Mercedes also have plants.
Consequences for Canada
The USA is Canada's largest and most important trading partner - almost one trillion dollars worth of goods and services are traded between the two neighboring North American countries. In addition to close cooperation in the automotive industry, Canadian companies sell a range of agricultural products and, above all, oil, gas and minerals to the United States.
Trump also justifies the punitive measures against Canada by claiming that immigrants from Canada are bringing crime and drugs across the border into the USA and that the Canadian government is not doing enough to combat this. Washington's tariffs on all imports from Canada are likely to make the products more expensive and therefore less attractive on the US market, which could ultimately cause serious damage to producers in Canada. Canadian Prime Minister Justin Trudeau had previously threatened to take countermeasures.
Consequences of the Canadian tariffs for European companies
The tariffs against Canada could also cause problems in Europe - at least for Volkswagen. The Wolfsburg-based company is planning a battery cell factory in Ontario near the US border to supply the Group's e-car plants in the USA. Trudeau's government had lured the billion-euro project with high subsidies.
Tariffs are now "poison" here, warns Stefan Bratzel from the Center of Automotive Management in Bergisch Gladbach and speaks of a "super-GAU for this investment". But this is still a long way off: production in St. Thomas near Toronto is not due to start until 2027.
Consequences for China
Trump criticizes, among other things, the large-scale flow of fentanyl into the USA from China. He argues that there will be tariffs until this stops. The new US tariffs are likely to be a further burden for the already struggling Chinese economy. Although Beijing has been trying to broaden its trade for years, the USA remains the most important export market and therefore an important pillar for many companies. In turn, tariffs on Chinese goods would probably lead to higher prices in the USA.
However, China is not defenceless. Beijing could consider responding with its own tariffs, particularly on agricultural products from the US. China could also implement targeted retaliatory measures, such as restricting the export of rare earths or stepping up investigations into US companies for using unfair means on Chinese markets. Overall, the already tense relations between the two superpowers are likely to deteriorate further.
Consequences of the China tariffs for European companies
Car manufacturers from Europe will probably also feel the effects of the tariffs against China - albeit only indirectly. Almost all manufacturers and suppliers operate large plants in China. However, production is almost exclusively for the Chinese market and there are no significant exports to the USA.
Industry expert Stefan Hecht from the management consultancy Advyce & Company nevertheless expects the effects to reach as far as Germany. In view of the new hurdles on the US market, Chinese manufacturers such as BYD are likely to push even harder into Europe than before, he believes. "Europe will then increasingly come to the fore as a sales market."
This could result in increasing competition and price wars on the German car market. "The local manufacturers will clearly feel the effects of this," says Hecht. After all, manufacturers such as VW are already struggling with high overcapacities in Germany. It remains to be seen how the EU Commission, which has already imposed punitive tariffs on electric cars from China, will react to Trump's new punitive measures.
Is it the EU's turn next?
The European Union itself must expect tariffs from Trump. "Absolutely", said the President recently when asked whether he would also impose tariffs on products from the EU. "The EU has treated us so badly", he said in justification. The USA had a "huge deficit" in trade with the European Union. "So we're going to do something very significant with the European Union", he announced - without giving details.
It has long been a thorn in Trump's side that European companies sell significantly more goods in the USA than American companies in the EU. There had already been a fierce trade dispute between the USA and the EU during Trump's first term in office. During his years in office from 2017 to 2021, Trump relied heavily on tariffs to settle trade disputes with other countries.