We all know Donald Trump loves a tariff. Not long ago he said it was his favourite word in the English language.
But one thing that might perplex people somewhat is why he is quite so keen on imposing tariffs on Mexico and Canada. After all, in his first term, his main focus when it came to trade was China.
It was under Donald Trump that swingeing new tariffs were imposed on China and Vietnam (often seen as a backdoor conduit for Chinese goods). Canada and Mexico, on the other hand, got a brand new trade deal to take the place of the long-standing NAFTA agreement.
Money blog: Wine could be more expensive to buy tomorrow
So what changed? While the president has talked repeatedly about how the tariffs will deter Mexico and Canada from sending opioids into the US, a more compelling explanation comes when you look at the American trade data.
There you see that since those tariffs were imposed in his first term, imports from China to the US have fallen quite considerably. Meanwhile, imports from Mexico and Canada have risen sharply, with Mexico now overtaking China as the biggest importer into the US.
If there’s one thing Donald Trump hates, about as much as he loves tariffs, it’s trade deficits – where you import more goods from a country than you export. Economists see deficits as an inevitable function of being a modern developed economy; Trump sees them as a kind of punishment – a subsidy for foreign countries.
Trump’s odd way of looking at the world
This is, to put it lightly, an odd way of looking at the world. While there are very legitimate concerns about the structure of the US economy, its inability to build its manufacturing sector and the impact of Chinese manufacturing overcapacity on the rest of the world, seeing all deficits as inherently bad is bizarre. Nonetheless, if you view the world that way, you won’t like the look of the US trade position with Mexico.
Look at those…
