On March 4, the U.S. tariff hike on imports from Canada, Mexico and China took effect, triggering a trade war.
The White House said the action was in response to the extraordinary threat posed by “illegal aliens and drugs”, including deadly fentanyl, which constitute a national emergency under the International Emergency Economic Powers Act (IEEPA).
President Donald Trump had claimed that the three countries failed to do enough to stem the flow of the opioid fentanyl and its precursor chemicals, as well as fail to control illegal immigration into the U.S.
“Until the crisis is alleviated, Trump is implementing a 25 per cent additional tariff on imports from Canada and Mexico and a 10 per cent additional tariff on imports from China.
“Energy resources from Canada will have a lower 10 per cent tariff.
“The orders make clear that the flow of contraband drugs like fentanyl to the U.S. through illicit distribution networks has created a national emergency, including a public health crisis.
“Chinese officials have failed to take the actions necessary to stem the flow of precursor chemicals to known criminal cartels and shut down money laundering by transnational criminal organisations,” the White House said.
Nonetheless, analysts say the tariffs go beyond curbing illicit imports and illegal immigration, as Trump aims to address supposed unfair trade practices, protect domestic industries and reduce trade deficit.
“Indeed, a fundamental focus of the trade war is the U.S. trade deficit; the Trump administration is looking for ways to reduce the imbalance of imports over exports.
“Specifically, the U.S. has raised concerns about intellectual property theft by China, and the trade war is seen as a means to check the situation.
“However, more than anything else, these actions are in line with Trump’s ‘America First’ policy, which emphasises protectionism and prioritises domestic industries,” an expert said.
The biggest talking point are the tariffs on steel and aluminium which have already been implemented, and further increases on Chinese goods have also been put into place.
China, Mexico and Canada are, however, not the only countries affected by Trump’s trade tariffs; the European Union (EU) has also been threatened with tariffs on certain imports.
Trump had called for the immediate removal of the EU’s “nasty” tariff on U.S. whiskey.
He threatened a response to the EU’s plans for a 50 per cent tax on imports of U.S.-produced whiskey as part of its retaliation to his tariffs on all steel and aluminium imports to the U.S.
Trump referred to the proposed tariff as hostile and abusive, and that it formed for the sole purpose of taking advantage of the U.S.
In response, he threatened a 200 per cent tariff on any alcohol coming to the U.S. from the EU.
Predictably, the countries directly involved are fighting back with their own retaliatory tariffs.
As the largest supplier of steel and aluminum to the U.S., Canada has placed 25 per cent tariffs on steel products.
It has also raised taxes on items such as tools, computers and servers, display monitors, sports equipment, and cast-iron products.
The EU has also announced fresh tariffs on American beef, poultry, motorcycles, bourbon, peanut butter and jeans.
On its part, China’s Ministry of Finance announced it would impose 15 per cent tariffs on imports of US liquified natural gas (LNG) and coal.
It also announced 10 per cent levies on oil, farm equipment and some automobiles.
In addition, Beijing said it would impose export controls on some rare earth minerals and metals central to the booming U.S. tech industry and its green energy industry.
Among other counter-measures, Canada’s border province of Ontario plans to hit its American customers with 25 per cent higher electricity prices.
Doug Ford, the Premier of Ontario, announced the decision.
“We will apply maximum pressure to maximize our leverage.
“I will not hesitate to increase this charge if necessary; if the U.S. escalates, I will not hesitate to shut the electricity off completely.’’
He estimated that the decision would cost each American affected an extra 69 dollars on average per month.
“Believe me when I say I do not want this; I feel terrible for the American people who did not start this trade war; It is one person who is responsible; it is Trump,” Ford said.
According to an Associated Press analysis, the new tariffs will cost companies billions of dollars, and further escalate the uncertainty in two of the world’s major trade partnerships.
Some analysts are even saying Trump’s tariff action and the retaliatory measures taken by the countries involved could reach nearly 2.2 trillion dollars in two-way annual U.S. trade.
Trump is on record to have said trade wars are good and easy to win.
However, his trade policies enacted during his presidency, both in his first and current term, have significantly impacted global trade dynamics.
The implications of his global trade war are complex and far-reaching, with effects felt across various sectors and nations.
Experts say while it could slowdown global economic growth, some countries or regions can actually benefit from the trade war.
For instance, they point at China’s decision to cancel all U.S. beef contracts and instead enter into alternative partnerships with Brazil and Canada.
Therefore, the question on the lips of some stakeholders in Africa is, what opportunities does the trade war portend for the continent?
Harry Clynch of the African Business recently wrote that African countries are expected to directly escape the tariff war because the U.S. only has a negligible trade deficit with the continent.
He also said the trade war seemed to be more focused on competing with larger powers, at least for now.
“In 2024 the U.S. trade deficit with Africa was 7.4 billion dollars – compared to an almost 300 billion dollars deficit with China in the same year.
“Furthermore, in 2023, 85 per cent of the U.S. trade deficit with countries covered by the African Growth and Opportunity Act (AGOA) came from just three of these – South Africa, Nigeria and Ghana.
“These countries’ primary exports, notably platinum and crude petroleum, are critical resources for which there is high demand in the U.S., which would appear to make tariffs self-defeating,” he said.
On the contrary, some suggest that global tariff war does not favour any country.
“In a scenario in which the world splits into two trading blocs around the EU and the U.S. versus China, sub-Saharan Africa would lose access to key export markets and experience higher import prices,” the IMF said.
Some experts say regional integration will provide a buffer for Africa in the case that the trade war becomes intense.
A recent World Bank report projected that, “Under deep integration, Africa’s exports to the rest of the world would go up by 32 per cent by 2035…and intra-African exports would grow by 109 percent, led by manufactured goods.”
Policy analysts, say there is need for greater participation in regional economic integration polices such as the African Continental Free Trade Agreement (AfCFTA).
A Professor of International Economic Relations, Jonathan Aremu, said for Africa to maximise the opportunities presented by AfCFTA, the countries must place equal emphasis on importation.
“There exists an incomplete perception among a lot of observers in the country that the AfCFTA is essentially about promoting exports only.
“Under the balance of payment, it is understood that every additional U.S. dollars’ worth of intra-African exports must be matched by a dollar of intra-African imports simultaneously,” he said.
Stakeholders say it has become imperative for Africa to boost local manufacturing and strengthen economic integration in order to safeguard itself from the adverse impacts of international trade war.(NANFeatures)
