Trump ends tariff game with Canada & Mexico sends a warning signal to ‘high-risk adversary’ China

The US trade war with China stems from the same strategy used on Mexico and Canada, and the recent end of metals duties for America’s allies could mean that the trade spat with Beijing is far from over, analysts have told RT.

Washington announced its decision to remove tariffs on steel and aluminum imported from Canada and Mexico, effective on Monday, in an effort to boost ratification of a new trade deal to replace NAFTA, known as the United States-Mexico-Canada Agreement (USMCA).

Initially tearing apart the old deal and imposing tariffs was just “political theatre” to gain internal political support, Richard Wolff, a professor emeritus of economics at the University of Massachusetts, told RT.

“It was a way to show Mr. Trump is a warrior of American interests, it portrayed Mexico and Canada as taking advantage of the United States,” Wolff said, adding that the reality is that every White House administration for the last 200 years managed to have mutually beneficial relationships with its northern and southern neighbors.

“The decision to end the tariff[s] is most likely due to the need to focus on the trade war with China and to get the new trade agreement with Canada and Mexico ratified,” former managing director and CEO of International Strategic Alliances, George Koo, wrote in an emailed comment.

Apart from a step toward the new trade deal with the two countries, the latest Trump decision indicates that steel and aluminum are strategically important industries “that can’t be outsourced to high risk adversaries”like Beijing, according to Jack Worthington, managing partner at Arundel & Co.

“It is a strong signal that the Trump administration believes the trade war/adversarial relationship with China is long term and won’t be resolved anytime soon. It’s an admission of irreconcilable trade and geopolitical differences with China,” the analyst said.

There is one thing similar in the tariffs imposed by the US on Canada, Mexico, and China, and that is the fact that they are used as an excuse for Washington’s domestic problems, according to Wolff.

What is similar, is the attempt by the US government to enforce a few changes on the trading partners. This is part of the idea that the problems of the American economy has something to do with foreigners,” the professor told RT, adding that US capitalism is obviously in trouble.

So, the tariff war with China follows from the same strategy that started with tariffs on Mexico and Canada.

While Wolff stressed that Mexican and Canadian exports cannot replace Chinese ones “at least for many years,” others argue that Trump’s move can help the countries’ investors to boost steel and aluminum manufacturing capacity, Worthington said.

The removal of duties on metals can actually take some of the pressure off US consumers, Peter Earle from American Institute for Economic Research noted.

Canada and Mexico may now be able to, and be in a position to, supply the US with some of the steel, aluminum, and/or other goods which tariffs on Chinese imports have made much more expensive,” the researcher explained.

Meanwhile, former CEO George Koo stressed that ending tariffs on the two US neighbors might have little impact on the trade war with China because the situation will worsen anyway due to the Trump administration’s actions.

Source: RT

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