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| Dear Clients, Please see today’s updates on tariff news. We have provided articles below on each topic for your reference. 25% Tariffs imposed today on goods from Canada and Mexico. 10% Additional Tariff imposed today on goods from China—on top of the recent 10% (20% total new tariffs). Agricultural Export Tariffs – Trump warns of new export tariffs effective April 2, 2025. Additional Tariffs under consideration (see articles below). If you’d like to discuss solutions for your imports, exports, U.S. Customs brokerage, or customs consulting needs, please reach out to our office. With nearly 40 years in business, we are a stable, reliable, and experienced partner—ready to assist you. Best regards, Damion Parker Office: 310-642-6954Mobile: 310-220-7541Email: d.parker@earth-services.com |
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| A global trade war raises fears of higher inflation and slower growth. |
| Economists have been bracing for tariffs ever since President Trump won the election last year. But the measures he took on Tuesday against the United States’ closest trading partners far exceeded what they expected, raising the risks of a much more significant blow to the economy. For a period of time, it was not entirely clear whether Mr. Trump would follow through on threats to impose new tariffs on the country’s three largest trading partners, Canada, Mexico and China. Many economists, policymakers and even administration officials had talked about the levies as simply negotiating tools that could be used to extract better terms from other countries. But on Tuesday, a 25 percent tariff on nearly all imports from Canada and Mexico and an additional 10 percent tariff on imports from China went into effect. Even now that the tariffs are in place, a number of experts still question how long they will last given their potential to significantly damage an otherwise solid economy. Economists this week published a raft of new estimates that sought to capture how bad the damage could be. One of the biggest concerns is how tariffs will impact price pressures that have yet to be fully extinguished in the aftermath of the worst inflation shock in decades following the pandemic. Consumer price growth remains higher than officials at the Federal Reserve, who are responsible for keeping inflation low and stable, want it to be. For them to lower interest rates, they want to be certain that inflation is coming back down to its 2 percent target. Krishna Guha, vice chairman at Evercore ISI, an investment advisory firm, warned that if these tariffs were maintained, it would increase the Federal Reserve’s preferred inflation gauge by roughly half a percentage point by the final quarter of the year. That gauge — the core personal consumption expenditures price index, which strips out volatile food and energy prices — stood at 2.6 percent as of January.The impact could persist into next year, Mr. Guha warned, forecasting an additional 0.2 percentage point bump in core P.C.E. inflation in 2026. Another concern is what these tariffs may mean for economic growth. The last time there was a global trade war stewarded by Mr. Trump, growth fears edged out those related to inflation. The reason was partly because price pressures at that time were, if anything, too low rather than too high. Moreover, companies responded to the uncertainty by pulling back, lowering business activity and raising the prospects of a much sharper slowdown. That prompted the Fed to lower interest rates in 2019 to safeguard the economy. This time around, Kathy Bostjancic, chief economist at Nationwide, expects that if the tariffs are maintained and retaliation ensues, as has already started, the growth in gross domestic product will be a full percentage point lower than it would otherwise have been. That would suggest the U.S. economy would only grow 1 percent in 2025. Over the course of 2024, it grew 2.5 percent. Ms. Bostjancic also estimates that what households end up spending on everyday items will increase on average by around $1,000 annually as a result of the tariffs. “Part of the negative impact on economic activity stems from the drop in business, consumer and investor confidence, as the consensus view was that tariffs would be used as a threat and negotiating tool, instead of being implemented,” she said. “The deterioration in confidence could very well lead businesses to pare or at least delay investments and new hires, consumers to delay purchases, and for financial risk assets, such as equities, to decline or increase in volatility.” Speaking at a House hearing on Tuesday, Mike Konczal, an economic official under the Biden administration, warned that the extreme uncertainty surrounding Mr. Trump’s tariff plans would also be detrimental. “That kind of policy uncertainty is very poor for investments, very poor for growth,” he said. With “prices increasing at a period where consumers and everyday people are much more sensitive to prices than they may have been in more recent decades, I do worry it will feed into inflation expectations.”LINK: https://www.nytimes.com/live/2025/03/04/us/tariffs-us-canada-mexico-china |
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| US tariffs take effect and Mexico, Canada and China retaliate with their own tariffs on the US |
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| WASHINGTON (AP) — President Donald Trump launched a trade war Tuesday against America’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin as the U.S. faced the threat of rekindled inflation and paralyzing uncertainty for business. Just after midnight, Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%. Beijing retaliated with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.Canadian Prime Minister Justin Trudeau said his country would plaster tariffs on more than $100 billion of American goods over the course of 21 days. “Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said. Mexican President Claudia Sheinbaum said Mexico will respond to the new taxes with its own retaliatory tariffs. Sheinbaum said she will announce the products Mexico will target on Sunday in a public event in Mexico City’s central plaza, perhaps with the delay indicating Mexico still hopes to de-escalate the trade war set off by Trump. As he promised voters, the U.S. president is abandoning the free trade policies the United States pursued for decades after World War II. Trump argues that open trade cost America millions of factory jobs and that tariffs are the path to national prosperity. He rejects mainstream economists who contend that such protectionism is costly and inefficient. Import taxes are “a very powerful weapon that politicians haven’t used because they were either dishonest, stupid or paid off in some other form,” Trump said Monday at the White House. “And now we’re using them.” |
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| Dartmouth College economist Douglas Irwin, author of a 2017 history of U.S. tariff policy, has calculated that Tuesday’s hikes will lift America’s average tariff from 2.4% to 10.5%, the highest level since the 1940s. “We’re in a new era for sure.” U.S. markets dropped sharply Monday after Trump said there was “no room left” for negotiations that could lower the tariffs. Shares were mostly lower Tuesday after they took effect.According to estimates by the Yale University Budget Lab, Trump’s tariffs amount to a tax hike of roughly $1.4 trillion to $1.5 trillion over 10 years, a massive increase that would disproportionately hit lower-income households. The Canada and Mexico tariffs were supposed to begin in February, but Trump agreed to a 30-day suspension to negotiate further with the two largest U.S. trading partners. The stated reason for the tariffs is to address drug trafficking and illegal immigration, and both countries say they have made progress on those issues. But Trump has also said the tariffs will only come down if the U.S. trade imbalance closes, a process unlikely to be settled on a political timeline. |
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| The tariffs may be short-lived if the U.S. economy suffers. But Trump could also impose more tariffs on the European Union, India, computer chips, autos and pharmaceutical drugs. The American president has injected a disorienting volatility into the world economy, leaving it off balance as people wonder what he will do next. “It’s chaotic, especially compared to the way we saw tariffs rolled out in the first (Trump) administration,” said Michael House, co-chair of the international trade practice at the Perkins Coie law firm. “It’s unpredictable. We don’t know, in fact, what the president will do.’’ |
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| Democratic lawmakers were quick to criticize the tariffs, and even some Republican senators raised alarms.Sen. Susan Collins, R-Maine, said she’s “very concerned” about the tariffs going into effect because of her state’s proximity to Canada. “Maine and Canada’s economy are integrated,” Collins said, explaining that much of the state’s lobsters and blueberries are processed in Canada and then sent back to the U.S.The world economy is now caught in the fog of what appears to be a trade war. |
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| Trudeau said Canada would impose 25% tariffs on $155 billion Canadian ($107 billion U.S.) worth of American goods, starting with tariffs on $30 billion Canadian ($21 billion U.S.) worth of goods immediately and on the remaining amount on American products in three weeks. “Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau said. The White House would like to see a drop in seizures of fentanyl inside the United States, not just on the northern and southern borders. Administration officials say that seizures of fentanyl last month everywhere from Louisiana to New Jersey had ties to foreign cartels. |
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| Damon Pike, technical practice leader for customs and trade services at the tax and consulting firm BDO, suggested the responses of other countries could escalate trade tensions and possibly increase the economic pressure points. “Canada has their list ready,” Pike said. “The EU has their list ready. It’s going to be tit for tat.’’Tim Houston, the leader of Canada’s Atlantic coast province of Nova Scotia, said he would direct the Nova Scotia Liquor Corporation to remove all U.S. alcohol from store shelves. Houston also said his government will limit access to provincial procurement for American businesses and double the cost for commercial vehicles from the United States on a tolled highway. The Trump administration has suggested inflation will not be as bad as economists claim, saying tariffs can motivate foreign companies to open factories in the United States. On Monday, Trump announced that Taiwan Semiconductor Manufacturing Company, the computer chipmaker, would be investing $100 billion in domestic production. Still, it can take time to relocate factories spread across the world and to train workers.Greg Ahearn, president and CEO of the Toy Association, said the 20% tariffs on Chinese goods will be “crippling” for the toy industry, as nearly 80% of toys sold in the U.S. are made in China. “There’s a sophistication of manufacturing, of the tooling,” he said. “There’s a lot of handcrafting that is part of these toys that a lot of people don’t understand … the face painting, the face masks, the hair weaving, the hair braiding, the cut and sew for plush to get it to look just so.” All of that killed labor “has been passed through generations in the supply chain that exists with China.” For a president who has promised quick results, Ahearn added a note of caution about how quickly U.S. factories could match their Chinese rivals.“That can’t be replicated overnight,” he said.LINK: https://apnews.com/article/trump-tariffs-canada-mexico-china-643086a6dc7ff716d876b3c83e3255b0 |
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| Trump tells US farmers to up production ahead of tariffs from April 2: ‘Have fun!’ |
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| Mike Bediganin New York, Monday 03 March 2025 23:14 GMT Donald Trump has warned U.S. farmers to start upping their production from April 2, after announcing that he will soon be imposing tariffs on “external” agricultural products.“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States. Tariffs will go on external product on April 2nd. Have fun!” the president wrote on Truth Social on Monday.However, he did not specify what products would be subject to the tariffs or if there would be any exceptions.In recent years, the U.S. has imported more agricultural products than it has exported. According to the USDA, in 2023, around $178 billion in products was exported – a $17 billion decrease from 2022.Meanwhile, the value of imports has grown, resulting in America’s agriculture trade deficit rising to a record $49 billion this year, according to last week’s forecast by the USDA. |
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| At least half of the value in U.S. agricultural imports are in horticultural products – a broad category that includes fruits, vegetables, spirits, wine, essential oils, tree nuts and more. Sugar, coffee, cocoa, and other tropical products account for around 15 percent of imports.Since taking office, the president has been determined to crack down on the U.S.’s reliance on imports through tariffs, specifically targeting Canada and Mexico – two of America’s largest trade partners.The president said on Monday that the sweeping 25 percent tariffs on Mexican and Canadian imports would begin on Tuesday. Though they were initially postponed in February, Trump said there was “no room left” for negotiations with the countries. |
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| Mexico shipped $45.4 billion of agricultural products to the US in 2023, accounting for about 23 percent of imports and making the country the US’s largest supplier, according to the USDA. Canada and the European Union sent a combined $73 billion in crops to the US, Bloomberg reported. Trump’s announcement of tariffs on “external” agricultural products comes shortly after the administration unveiled plans to invest $1 billion in a new strategy to mitigate the impacts of bird flu, which has raised egg prices and slowed milk production across the U.S.Agriculture Secretary Brooke Rollins previously defended Trump’s plans to use tariffs to protect U.S. farm interests. “His idea of using tariffs in his tool kit has proven very successful the first time. I have no doubt it will be successful again,” Rollins told reporters last week. LINK: https://www.the-independent.com/news/world/americas/us-politics/trump-farmers-agriculture-imports-tariffs-b2708303.html |