Trump's threatened tariffs projected to damage economies of US, Canada, Mexico, and China

Trump's proposed tariffs on Mexico, Canada, and China could harm all involved economies, including the US. These measures aim to tackle illegal immigration and drug flows, according to a commentary by experts at Peterson Institute for International Economics.

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The issue:  

Trump intends to impose a 25% tariff on Mexico and Canada and a 10% tariff on China to address illegal immigration and fentanyl trafficking. These tariffs threaten to disrupt highly integrated economies, potentially reducing US GDP by $200 billion and significantly slowing growth in all affected countries.

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What they recommend:  

Experts advise renegotiating the US-Mexico-Canada Agreement (USMCA) to avoid the economic damage from imposing tariffs. They suggest making concessions within the agreement to address US concerns and prevent the need for tariff imposition.

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Go deeper:  

The analysis utilizes the G-Cubed model to project extensive GDP losses and increased inflation across the US, Mexico, Canada, and China if the tariffs are implemented. Mexico, heavily reliant on US exports, faces catastrophic economic impacts, potentially exacerbating illegal immigration incentives. Historical patterns indicate that Trump may not follow through on his tariff threats, as seen during his previous administration.

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This is a brief overview of the commentary by experts at Peterson Institute for International Economics. For complete insights, we recommend reading the full commentary.