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      Trump tariffs: what are reciprocal tariffs and how will they affect US consumers?

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      Donald Trump has once again threatened to impose a wave of tariffs on US imports, stepping up his bid to overhaul the global economic order.On Thursday, the US president said he plans to introduce “reciprocal” tariffs, ensuring the US imposes the same taxes on its imports from the rest of the world that American goods face in other countries.“It’s fair to all,” said Trump. “No other country can complain.”The latest announcement follows a string of others from the Trump administration, promising tariffs on both America’s close allies and economic rivals. But most have yet to be enforced.Here’s what we know about Trump’s tariffs so far:What are the tariffs has Trump announced?No new tariffs were announced on Thursday. Instead, the president ordered his officials to investigate which countries the US should target with import duties.The White House has previously said it would place a 25% tariff on goods from Canada and Mexico, introduce a 10% levy on Canadian energy exports, and amend duties on steel and aluminum from all over the world.So far, the only new duty that has come into force under Trump is a a new 10% tariff on goods from China..What is a tariff and why does Trump want to use it against certain countries?A tariff is a tax levied on foreign goods imported into a country. The US is currently the largest goods importer in the world – in 2022, the value of imported goods in the US totalled $3.2tn.Before entering office, Trump threatened tariffs on the US’s three biggest trading partners: China, Mexico and Canada. Specifically, he said he wanted to see a 25% tariff on Mexico and Canada and a 10% tariff on China, until the countries deal with immigrants and illegal drugs coming into the US.Trump sees tariffs as a powerful bargaining chip – but it comes with a high price.Trump frames tariffs as a policy that can apply pressure on US manufacturers and importers to produce goods domestically.“All you have to do is build your plant in the United States, and you don’t have any tariffs,” Trump has said. But the global economy has been intertwined for decades. US farmers, for example, would not be able to produce the number of avocados Mexico produces for many years.What this means is that importers will probably push the cost of tariffs on to consumers, causing prices to rise.What is a reciprocal tariff?On the campaign trail and in the White House, Trump has repeatedly raised the prospect of a wave of “reciprocal” duties: taxing imports from certain countries at the same rate those countries impose on goods from the US.The president and his allies have pitched this as a great rebalancing of the global economy, which they claim has been tilted against the US for too long.How will US consumers be affected by the tariffs?Tariffs on imports often make prices go up.Canada, for example, is a major exporter of crude oil, while Mexico exports many fresh fruits and vegetables. Mexico is also the largest auto parts exporter to the US. China is a major exporter of chips used in electronics like phones and laptops.It’s not just the imports that consumers buy directly. When tariffs push up the price of imports, that includes imported materials used to make other products domestically in the US. Higher prices for materials will eventually make their way to consumers.Americans have been bracing for the impact tariffs will have on prices. In a November Harris/Guardian poll, nearly two-thirds of Americans said they expected prices to go up if Trump implements broad tariffs.Which federal laws give Trump the power to enact tariffs?US federal law gives the president broad powers to enact tariffs without congressional approval.Trump has the power to declare a national economic emergency to enact his tariffs. This would invoke the International Emergency Economic Powers Act (IEEPA), which gives the president the power to manage imports during a national emergency.Trump can also apply tariffs under section 232 of the Trade Expansion Act, which gives the president power to impose tariffs on certain industries. This is what Trump used in 2018, when he hit Canada, Mexico and the European Union with tariffs on aluminum and steel.Have a question about Trump tariffs? Wondering how they affect inflation, prices or the economy? We’re here to help. Email callum.jones@theguardian.com and we may answer your question in a future story More

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      Canada’s Liberal party was left for dead, but Trump might have just given it a second chance

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      Until just a few weeks ago, it was an exhilarating time to be a Conservative in CanadaAfter nearly 10 years of Liberal rule, a deepening cost of living crisis had soured public support for Justin Trudeau and his shop-worn government. The Tory leader, Pierre Poilievre, had seized on a controversial carbon levy, and pledged to make the next federal vote an “axe the tax” election. Pollsters predicted his party would seize a convincing majority of seats. The country was on the cusp of a new Conservative era.And then Donald Trump suggested the US might take over Canada.The US president’s threats – ranging from “economic coercion” to outright annexation – have upended Canadian politics in a way few could have predicted. Speaking to reporters aboard Air Force One on Sunday as he travelled to the Super Bowl game, Trump further escalated his rhetoric, claiming that Canada is “not viable as a country” without US trade, and warning that it can no longer depend on the US for military protection.For the last two years, any consideration of the future of Canada’s Liberal party had focused on the scale of its impending electoral loss. But in recent weeks, a series of polls have suggested that the Liberals have reversed their freefall.And a key factor in the party’s apparent resurrection has been Trump.Since Trump’s comments, Canada has seen a groundswell of visceral patriotism. Maga-style hats emblazoned “Canada Is Not for Sale” went viral. Canadians jeered visiting American sports teams, even during a children’s ice hockey tournament in Quebec City.And amid a shift in the public mood, the Canadian prime minister has positioned his government as leading a “Team Canada” approach to the emerging threat from the south.“In this moment, we must pull together because we love this country,” Trudeau said in a recent speech in response to Trump’s threats. “We don’t pretend to be perfect, but Canada is the best country on earth. There’s nowhere else that I and our 41-million strong family would rather be, and we will get through this challenge just as we’ve done countless times before: together.”But for Poilievre, who had harnessed a populist current in the country and drawn comparisons with Trump, the avenues forward are less clear.The Conservative leader’s combative politics have served him well against Trudeau, but now appear to be faltering as nationalism supplants partisanship.One poll, from Ipsos, found the Conservatives had shed roughly 12 points of support within two weeks. Another survey in Quebec, from the firm Leger, found that if the Liberals put former central banker Mark Carney atop their ticket, the party vaulted far ahead of both the Conservatives and the separatist Bloc Québécois.A third, from the outfit Mainstreet, found the Liberals were tied – or even leading – among likely voters in the battle ground of Ontario.“This is very much a race that still favours the Conservatives. But if the Liberals gain even a couple more points, we’re in a place where they would suddenly become much more competitive, and the potential for minority government is possible,” said Éric Grenier, a political analyst at the Writ.One of the main drivers in shifting sentiment has been the resignation of Trudeau as Liberal leader, after the Conservatives had gleefully prepared to wage an entire federal election campaign against him.“Now the election isn’t going to be about Trudeau. And with both Liberal candidates saying they won’t move forward with the carbon tax, it also won’t be about that. It will most likely be about the next four years and who is best able to dealing with Trump,” said Grenier.Last week, another poll from the Globe and Mail and Nanos found that 40% of Canadians felt Carney – the former governor of the Bank of England – was best suited to face off against Trump. Only 26% of respondents felt that person was Poilievre.For a campaign to go from a very specific issue – a referendum on Trudeau’s last nine years as leader – to a completely different issue – Donald Trump – is “rare”, said Grenier.The Conservatives plan to present a new, patriotic election message in the coming days. Attenders have been instructed to wear red and white – the colours of Canada, but also the colours of the Liberal party.“Adopting a Canada-first approach to the election is needed, but it’s an awkward one for them, because they’ve been saying for the last couple years that the country is broken,” said Grenier. “And now they have to say: ‘Well, it is but we still really love it.’ And it also feels a bit forced because a segment of their voting base – and probably a segment of their caucus – prefers to have Donald Trump as a president.”For the Liberals, the reversal confirms their decision to force Trudeau out. But Grenier cautions against reading too much into the polling.“The danger for someone like Carney, who is polling surprisingly well in a place like Quebec, is that some of the numbers are quite high. Can he live up to that? Or is the idea of him more attractive to voters than the reality of him as an actual leader?”Still, in an election fought over national identity and the protection of sovereignty, Liberals have unexpectedly found themselves dealt a few lucky cards.None of the Liberal candidates vying for the party’s top job are cabinet ministers, depriving opposition parties the chance to accuse them of dereliction.“It may still be a ‘change’ election, but it looks like it is not going to be a carbon tax election. Rhyming couplets like ‘axe the tax’ feel a little stale and disconnected from contemporary political and economic challenges,” said Scott Reid, a political adviser and former director of communications to the former Liberal prime minister Paul Martin. “And if the next election is going to be about how we rewire our relationship to the United States in the face of Trump’s capriciousness, someone with the credentials of Mark Carney starts to look interesting to some voters, and it at least gives the Liberal party the possibility of resurrecting itself.”Still, the polls at this point are “more akin to a spark than a bonfire’’, Reid said, adding that if an election were held today, Poilievre’s Conservatives would probably win a majority of seats.But the largely unprecedented nature of Trump’s unpredictable incursions into the national discourse means that honing a careful message, for either party, is largely a useless task.“What will Donald Trump do in the coming months when there’s a new prime minister on the scene [after the Liberals select their new leader]? How might he blunder into the minefield of Canadian politics? We just don’t know,” said Reid. “But we almost do know that it will happen. Either he determines the ballot question or, on any given day, he has the capacity to dictate the ballot question of the next election. That’s just the reality of it.” More

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      Ontario leader threatens to halt energy exports to US if Trump imposes tariffs

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      The leader of Canada’s largest province says he’s prepared to halt energy exports to the United States, warning that other premiers “need to be ready to fight” as threats escalate ahead of possible American tariffs.The Ontario premier, Doug Ford, says he’s weighing options to fight back against a 25% levy on all Canadian goods that the US president-elect Donald Trump has pledged to implement when he assumes office.Following a meeting with the nation’s premiers and the prime minister, Justin Trudeau, Ford said other leaders were also drawing up lists of exports that could be halted.“But we will go to the full extent, depending how far this goes, we will go to the extent of cutting off their energy, going down to Michigan, going down to New York state and over to Wisconsin,” said Ford. “I don’t want this to happen, but my number one job is to protect Ontario, Ontarians and Canadians as a whole.”Canada’s most populous province is also among the most vulnerable to American tariffs because roughly 85% of its exports – including billions in automotive parts – are sent to a handful of US states. As a result, Ford has emerged as the Canadian politician most vocal about the devastating effects the tariffs would have on hundreds of billions of shared trade.“We need to be ready. We need to be ready to fight,” said Ford. “This fight is coming 100% on January 20 or January 21.”Ford’s threat aims to highlight both the integrated nature of North American economies and also to put pressure on state governors. But is unclear how much Ford could follow through on his pledge to cut electricity exports, given that premiers do not make international energy policy.Canada supplies roughly 60% of all American oil imports and even more of its electricity imports. In 2022, Canada’s revenue from electricity exports to the United States hit a record high of C$5.8bn. Quebec is the largest exporter, with Ontario following second at 13.9m megawatt-hours of power sent south.“We will use every tool in our tool box to fight back,” said Ford. “We can’t sit back and roll over. We just won’t as a country. And isn’t this a shame, our closest friends and allies.”Trump threatened last month to apply the devastating levies of 25% on all goods and services from both Mexico and Canada, vowing to keep them in place until “such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!”Last week, Trump seemed to take joy in the panicked response from Canadian officials, calling Trudeau Canada’s “governor” of a potential “51st” state. More

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      If Trump’s tariffs start a trade war, it would be an economic disaster | Mark Weisbrot

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      “To me, the most beautiful word in the dictionary is tariff, and it’s my favorite word,” said Donald Trump last month. Pundits, politicians and financial markets are trying to figure out why, since he announced a week ago that he would impose tariffs on the United States’s three biggest trading partners: 25% for Mexico and Canada, and 10% for China.One theory is that tariffs can be a beautiful distraction. Trump, more than any previous US president, has fed on distractions for years, both to campaign and to govern. He can move seamlessly from one distraction to the next, like a magician preparing for the opportune moment to pull a coin from where it appears to have been hidden behind your ear.Although he still has seven weeks before he takes office, he could use a distraction that can start sooner. He has run into problems with cabinet and other appointments that require Senate confirmation. Of course he could easily find people who would do his bidding and be acceptable to a Senate with a Republican majority. But that would defeat the main purpose of nominating people who seem indefensible: to force Republican senators to display the abject subservience that Trump needs to be public, in order to ensure his unwavering dominance within his party.This is no small part of his governing strategy; it involves a big takeaway from the failures of his first term, from his point of view. The lesson is: loyalty to Trump first. Violators will be banished. And with small margins in the Senate and the House, things could begin to unravel if this core imperative goes unenforced.But the days before Trump actually takes office could also be the best time for him to use the threat of tariffs to begin bullying foreign governments for things that might benefit his allies, donors or himself. Other governments besides the three that he named are trying to figure out what they can offer Trump to avoid the economic disruption of tariffs. Christine Lagarde, the head of the European Central Bank, who does not see Trump as a friend, has urged the EU to negotiate with him, rather than adopt a retaliatory, eg tariff, response.Trump’s two offered pretexts for the tariff threat – migration and drugs, in this case fentanyl – are not credible. About 18% of the undocumented people encountered by border patrol over the past year have been from Venezuela and Cuba, two countries that have been devastated economically by sanctions imposed by the US government. If reducing immigration were really Trump’s concern, he would not have deployed sanctions that have driven millions of people from their homes to the US border; and he could end these sanctions in January by himself.Broad economic sanctions are a form of economic violence which targets civilians in order to achieve political ends, including regime change. US congressman Jim McGovern, a Massachusetts Democrat, made this clear in a letter that he wrote to Joe Biden asking for the sanctions on Venezuela to be dropped. The Trump sanctions in Venezuela in 2017 killed tens of thousands of civilians during the first year, and many more in the years that followed, including under Biden.As for fentanyl, about 75,000 people died from overdoses of this drug in 2023. But it’s difficult to see how Trump’s tariffs could help solve this problem. It’s a glaring example of how more than four decades of a failed “war on drugs”, based on criminalization of use and supply-side intervention, have made things worse. In this case the drug war has led to an innovation – fentanyl – that is vastly more powerful than heroin, much cheaper to produce, more addictive and easier to transport, distribute and produce.There is general agreement in the economic research on the effects of Trump’s trade and tariff wars in his first term as president, in which he placed tariffs on about $380bn of US imports. The overall impact on living standards for US workers and most Americans is found to be negative, with the cost of the tariffs being absorbed by US consumers. Employment overall did not increase, and may have fallen due to the negative impact of retaliatory tariffs.The economic research looking at the expected impacts of tariffs that Trump has talked about going forward also finds the impact on the US economy to be negative. And there is potential for much more damage if other countries respond with more retaliatory tariffs than they did in 2018-2020.Meanwhile, the productivity of Trump’s tariff offensive in generating distractions remains high. On Sunday he took a shot at the so-called Brics countries – Brazil, Russia, India, China and other economic powers: “We require a commitment from these countries,” Trump wrote on Truth Social, “that they will neither create a new Brics currency nor back any other currency to replace the mighty US dollar or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful US economy.”None of these things will happen while Trump is in office. Nor will threats like this deter the majority of the world, when it is ready, from replacing a system of global governance that is overwhelmingly run by one country with help from the richest people in other rich countries. Our current system is one in which the “exorbitant privilege” that the dollar-based financial system bestows upon the US government gives the president the power to destroy whole economies with the stroke of a pen.But this is a longer story; for Trump it’s just another threat and another distraction in the post-truth world that he, as much as anyone, helped create. But he will need more than distractions to take this country further down the road toward de-democratization, which is what brought to him and his party the power that they now have.

      Mark Weisbrot is co-director of the Center for Economic and Policy Research. He is the author of Failed: What the “Experts” Got Wrong About the Global Economy More

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      Trudeau meets rivals as he seeks united front in face of Trump tariff threat

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      Canada’s federal government has redoubled its efforts to ward off potentially disastrous tariffs from its closest ally, but provincial leaders have hinted at divergent strategies in response to the protectionist threat from president-elect Donald Trump.Canada’s prime minister, Justin Trudeau, convened a rare, in-person meeting with his political rivals on Tuesday to brief them on a surprise meeting with Trump at his Florida resort over the weekend.The gathering in Ottawa was attended by Trudeau’s one-time ally Jagmeet Singh of the New Democratic party and Pierre Poilievre, the Conservative leader and Trudeau antagonist vying to become prime minister in the coming months.Last week, Trump threatened in a social media post to apply devastating levies of 25% on all goods and services from both Mexico and Canada, vowing to keep them in place until “such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!”Most of Canada’s provinces share a land border with the United States and roughly 75% of the country’s exports are bound for American markets.That figure varies wildly when it comes to provincial economies. The Atlantic provinces send as little as 20% down to their southern counterparts. Alberta, on the other hand, sends nearly 90% of its exports to the US, the vast majority of which are oil.If Ontario were a country, it would be the US’s third-largest trading partner.The province’s premier, Doug Ford, has appealed to a shared history with his American neighbours – and nearly C$500bn of annual trade – in a 60-second ad which will run in the US market including on Fox News and during National Football League games with millions of viewers.Ford also repeated warnings that the measure would rebound on US consumers, telling local media: “1,000% it’s gonna hurt the US. Nine thousand Americans wake up every single morning to build products and parts for Ontario, and customers in Ontario … My message to [Trump] is: Why? Why attack your closest friend, your closest ally?”As much as 85% of Ontario’s exports are sent south, with the vast majority related to the automotive industry.But in British Columbia, where less of its economy is tied to the US, the premier, David Eby, has pledged to search out other export markets.Roughly half of the province’s exports, including softwood lumber and metallurgical coal, from BC is bound to the US, according to provincial trade figures.“We’re going to continue to do our work to expand those trading opportunities,” Eby told reporters, a nod to the growing lure of overseas markets for a province on the Pacific Ocean.Given Trump’s previous follow-through on tariff threats, his latest warning prompted a scramble in Ottawa, with Trudeau securing a meeting with Trump at Mar-a-Lago, becoming the first G7 leader to meet the president-elect since the US election.The meeting, attended by key advisers from both camps, was described as a “very productive meeting” by Trump. Trudeau, who flew to Florida with the aim of dissuading the president from imposing tariffs, described the meeting as “excellent conversation” – but left without any assurances.Without that promise, experts say Canada will need a unified voice to lobby elected officials in the US.“Coordinating Canadian leaders to conduct extensive outreach in the US – which worked well during Trump’s first term – will be harder this time, because an election is looming in Canada, because Trudeau is behind in the polls,” said Roland Paris, a former foreign policy adviser to Trudeau and director of the University of Ottawa’s Graduate School of Public and International Affairs.“Discord at home makes this advocacy campaign tougher, but that’s the situation that we face now. It’s a different moment in the political life cycle of this government.Poilievre has spent the last week suggesting the prime minister was caught off-guard by Trump’s win in November, despite assurances from federal officials that contingency plans for a Trump or Kamala Harris win were in place.The Conservative leader also criticized Trudeau’s emergency meeting with provincial premiers last week. “Justin Trudeau’s plan to save the economy? A Zoom call!” he posted on social media.Paris cautioned too much against playing domestic politics with a sensitive trade relationship.“Party leader leaders in Canada are going to have to be careful, because if they’re perceived to be working against the national interest in pursuit of their partisan objectives, then that could blow up in their faces too.” More

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      Trump maintains hard line on Canada after meeting with Trudeau

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      Donald Trump said he had a “productive” meeting with Justin Trudeau after the Canadian prime minister paid a surprise trip to his Mar-a-Lago estate amid fears about Trump’s promised tariffs.Trudeau became the first G7 leader to meet with Trump before his second term amid widespread fears in Canada and many other parts of the world that Trump’s trade policy will cause widespread economic chaos.But Trump also seemed to double down on the threat, which he has frequently linked to trying to encourage other countries to combat drug smuggling into the US.“I just had a very productive meeting with Prime Minister Justin Trudeau of Canada, where we discussed many important topics that will require both Countries to work together to address, like the Fentanyl and Drug Crisis that has decimated so many lives as a result of Illegal Immigration, Fair Trade Deals that do not jeopardize American Workers, and the massive Trade Deficit the US has with Canada,” Trump said in a statement posted to Truth Social, his social media platform.Trudeau and a handful of top advisers flew to Florida amid expectations that Trump will impose a 25% surcharge on Canadian products that could have a devastating impact on Canadian energy, auto and manufacturing exports.The meeting over dinner between Trudeau and Trump, their wives, US cabinet nominees and Canadian officials, lasted over three hours and was described by a senior Canadian official to the Toronto Star as a positive, wide-ranging discussion.Trump added: “I made it very clear that the United States will no longer sit idly by as our Citizens become victims to the scourge of this Drug Epidemic, caused mainly by the Drug Cartels, and Fentanyl pouring in from China. Too much death and hardship! Prime Minister Trudeau has made a commitment to work with us to end this terrible devastation of U.S. Families.”Leaving a Florida hotel in West Palm Beach on Saturday, Trudeau said: “It was an excellent conversation.”The face-to-face meeting came at Trudeau’s suggestion, according to the Canadian official, and had not been disclosed to the Ottawa press corps, which only found out about Trudeau’s trip when flight-tracking software detected the prime minister’s plane was in the air.The two leaders discussed trade; border security; fentanyl; defense matters, including Nato; and Ukraine, along with China, energy issues and pipelines, including those that feed Canadian oil and gas into the US.Over a dinner that reportedly included a dish called “Mary Trump’s Meat Loaf”, the pair also discussed next year’s G7 meeting, which Trudeau will host in Kananaskis, Alberta – seven years after Trump abruptly left the 2018 G7 at Charlevoix, Quebec, amid a US-Canadian dispute over American steel and aluminum tariffs.The Pennsylvania senator-elect Dave McCormick posted a photo to the social media platform X late Friday showing Trudeau sitting beside Trump. Others in the picture included Howard Lutnick, Trump’s nominee for commerce secretary; Governor Doug Burgum of North Dakota, the pick for interior secretary; and the US representative Mike Waltz of Florida, the pick for national security adviser.Canadian officials included the public safety minister, Dominic LeBlanc, responsible for border security, and Trudeau’s chief of staff, Katie Telford. Canada’s ambassador to Washington, Kirsten Hillman, and Trudeau’s deputy chief of staff, Brian Clow, were also at the dinner.LeBlanc said Canada was prepared to beef up border security, with more money for technology, drones and more Mounties and border guards on the 49th parallel.Earlier on Friday, Trudeau told reporters that he looked forward to having “lots of great conversations” with Trump and that the two would “work together to meet some of the concerns and respond to some of the issues”.Trudeau also said that it was “important to understand is that Donald Trump, when he makes statements like that, he plans on carrying them out. There’s no question about it.“Our responsibility is to point out that in this way, he would actually not just be harming Canadians, who work so well with the United States, he would actually be raising prices for American citizens as well, and hurting American industry and businesses.”skip past newsletter promotionafter newsletter promotionBut some observers were less than impressed.“The symbolism of Trudeau going down to Palm Beach on bended knee to say ‘Please don’t’ is very, very powerful,” Fen Hampson, professor of international affairs at Carleton University in Ottawa, told Bloomberg.“The stakes are enormously high and Trudeau has to deliver on this,” Hampson said. “Otherwise, it’s going to be seen by Canadians as a failed mission, because we all know why he’s going down there and it’s not to baste the turkey for Trump.”The scramble to diffuse Trump’s tariff threats has also pre-occupied the Mexican president, Claudia Sheinbaum, in recent days.On Thursday, Sheinbaum said she had had a “very kind” phone conversation with Trump in which they discussed immigration and fentanyl. She said the conversation meant there “will not be a potential tariff war” between the US and Mexico.But the two leaders differed on Trump’s claim in a post on Truth Social that Sheinbaum had “agreed to stop Migration through Mexico, and into the United States, effectively closing our Southern Border”.The Mexican president later said she had not. “Each person has their own way of communicating, but I can assure you, I guarantee you, that we never – additionally, we would be incapable of doing so – proposed that we would close the border in the north [of Mexico], or in the south of the United States. It has never been our idea and, of course, we are not in agreement with that.”Sheinbaum said the pair had not discussed tariffs but their conversation reassured her that no tit-for-tat tariff battle would be necessary.Trump also expanded on his economic message on tariffs to other global leaders on Saturday, threatening Brics countries – an acronym that includes Brazil, Russia, India, China and South Africa – with 100% tariffs if they acted on discussions to drop the dollar as their reserve currency.“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER,” Trump wrote on Truth Social.Trump said the US would require “a commitment” from Brics nations – a geopolitical alliance that now also includes Iran, Egypt, Ethiopia and the United Arab Emirates – “that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs”. More

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      ‘He loves to divide and conquer’: Canada and Mexico brace for second Trump term

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      Stone-faced as he stared into a gaggle of cameras on Tuesday, the leader of Canada’s largest province laid bare how it feels to be America’s northern neighbour and closest ally this week.“It’s like a family member stabbing you right in the heart,” said Ontario’s premier, Doug Ford. A day before, president-elect Donald Trump had pledged hefty tariffs on Mexico and Canada, the US’s two largest trading partners. “It’s the biggest threat we’ve ever seen … It’s unfortunate. It’s very, very hurtful.”For both Mexico and Canada, whose economic successes are enmeshed in their multibillion-dollar trade relationships with the United States, the forecasted chaos and disruption of a second Trump term has arrived. And the first salvo from Trump has already forced leaders from Mexico and Canada to revisit their relationship with the US – and with each other.Both have maxims to describe living in the shadow of the world’s largest economic and military superpower, which sees nearly $2tn worth of goods and services pass through its two land borders.“Living next to you is in some ways like sleeping with an elephant,” the late prime minister Pierre Trudeau told then US president Richard Nixon. “No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”For Mexicans, it is the words of the 19th-century dictator Porfirio Díaz: “Poor Mexico: so far from God, so close to the United States.”The vagaries of the relationship were tested again this week when Trump threatened in a social media post to apply devastating levies of 25% on all goods and services from both countries, and to keep them in place until “such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!”Although in 2018 the US, Canada and Mexico renegotiated the Nafta trade pact that Trump had long blamed for gutting US manufacturing, the three countries still have deeply intertwined supply chains – especially an automotive industry that spans the continent – making a levy of that magnitude potentially devastating to all.In Canada, Trump’s demands have left the government scrambling to make sense of the threat – and how seriously to take it.“‘Good-faith negotiator’ is not usually a descriptor of Donald Trump. He loves to disrupt it. He loves to divide and conquer,” said Colin Robertson, a former senior Canadian diplomat who has had numerous postings in the US. “Trump is determined to truly make his mark. Last time he was disorganized. This time, he’s certainly started off demonstrating a high degree of organization.”Even before Trump’s announcement, the Canadian prime minister, Justin Trudeau, and a handful of provincial premiers had mused openly about cutting Mexico out of future trade talks, instead pivoting towards a Canada-US trade pact – a move that Mexico’s lead negotiator called a “betrayal”.On Wednesday, Trudeau held an emergency meeting with all 10 premiers to push a “Team Canada” approach to the confrontation, pledging hours later to invest more in border security – a nod to Trump’s criticism of Canada’s patrolling of its border.A challenge for Canada is a need to approach Trump with skepticism, but also to take the threats seriously, says Robertson, adding that Canada’s trade relationship with the US is immensely lopsided. “The reality is, we need them. They’re big, we’re small.”Still, Trump’s demands “are perverse, but unfortunately predictable”, says Roland Paris, director of the Graduate School of Public and International Affairs at the University of Ottawa and former foreign affairs adviser to Trudeau.He notes that only a sliver of the fentanyl entering the US comes from Canada, a figure so small the US Drug Enforcement Administration (DEA) does not even mention Canada in a report from 2020. As for migrants entering the US, Canada’s federal minister says yearly interceptions are similar to a “significant weekend” at the Mexico border.“This is [Trump’s] modus operandi,” said Paris. “He’s not wasting any time throwing America’s principal trading partners off balance, before he even enters office.”Ottawa’s efforts to smooth things over with Trump are also hampered by domestic politics. Trudeau remains immensely unpopular in polls, and the rival Conservatives have cast the prime minister as weak and ill-equipped to both preserve what Nixon called Canada’s “special relationship” with the US and to face off against a mercurial president.Paris imagines the prime minister’s cabinet, especially veterans of bruising negotiations with Trump during his first term, as “determined” to manage relations with a country that for decades has remained a staunch ally. He says years of close work has produced a significant overlap in policy goals for the two nations, including skepticism of China and a need to secure critical mineral and energy supply chains.skip past newsletter promotionafter newsletter promotion“Canada is going to need resolve, patience and the most far-reaching advocacy campaign this country has ever conducted in the United States,” he said. “But everybody knows that Trump is so unpredictable that there’s no saying what he might do this time.”For Mexico, which has long borne the brunt of Trump’s ire, Monday’s tariff threat comes amid already tense relations, including a reform to elect almost all judges by popular vote that has drawn sharp criticism from the US. At the same time, the arrest in July of two top Sinaloa cartel bosses in Texas, a move that surprised Mexican officials, has triggered a bloody gang war that the Mexican president, Claudia Sheinbaum, blames on the US.On Wednesday, Sheinbaum spoke with Trump, a conversation which the US president-elect characterised as “wonderful” after he claimed the Mexican president pledged to “stop Migration through Mexico, and into the United States, effectively closing our Southern Border”. Sheinbaum later gently clarified that she wouldn’t close the border, but that the call was “very kind” and had convinced her that no tariffs would happen.Martha Bárcena, a former Mexican ambassador to the US, said Trump’s tariff suggestion has kicked off “panic” in the Mexican community living in the US. “How can you hit your partners in a free trade agreement with tariffs 25% higher than what you put on the rest of the world? It’s crazy,” she said.“What was his ceiling is now his floor,” she said of his previous negotiating position on trade. “The lesson? Never yield to a bully.”Alejandro Celorio Alcántara, a Mexican diplomat who oversaw migration when Trump first came to power, says the bombast of the next US president can be easier to work with than more traditional allies.“The Biden administration is a little more diplomatic, but this can actually make the discussion more complicated, because you don’t know what the terms of negotiation are,” he said. “Maybe it’s just my style of negotiation. It’s simpler when it’s more open. They put the cards on the table: ‘This is what we want.’ Then you can respond.”Both Mexico and Canada have scores of diplomats already experienced with Trump, but both sides also expressed concern that many of the key figures in Trump’s first term, who acted as a “check” on the president’s whim-based policy decisions, will be absent from the second administration, replaced by loyalists and idealogues who will do whatever he says.Still, for Mexican officials, there is a glimmer of hope that those in positions of power are more reasonable when they’re not in the media spotlight. Alcántara noted that “border czar” Tom Homan, who recently pledged to carry out a “mass deportation’, is known for his controversial positions, “but if you take the facts to him and explain them, he understands. He has a certain discourse in the media that’s very aggressive, but when you sit down together, you can talk.”For Mexico and Canada, a recognition that their fates remain tied to the US has forced them to redouble their efforts, not to reconsider their relationship.“In the end, we need to bet on a strong North America,” said Alcántara. It’s simple: make North America great again. As a region, not just the United States.” More

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      Mexican president claims ‘no potential tariff war’ with US after call with Trump

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      Claudia Sheinbaum has said her “very kind” phone conversation with Donald Trump, in which they discussed immigration and fentanyl, means “there will not be a potential tariff war” between the US and Mexico.The president of Mexico spoke to reporters on Thursday following Trump’s threat earlier in the week to apply a 25% tariff against Mexico and Canada, and an additional 10% tariff against China, when he takes office in January if the countries did not stop all illegal immigration and fentanyl smuggling into the US.Trump, in a post on Truth Social on Wednesday, claimed that during the phone call with Sheinbaum she had “agreed to stop Migration through Mexico, and into the United States, effectively closing our Southern Border”.During her Thursday address Sheinbaum clarified she did not agree to shut down the border.“Each person has their own way of communicating,” Sheinbaum said. “But I can assure you, I guarantee you, that we never – additionally, we would be incapable of doing so – proposed that we would close the border in the north [of Mexico], or in the south of the United States. It has never been our idea and, of course, we are not in agreement with that.”She added that the two did not discuss tariffs, but that the conversation with Trump had reassured her that no tit-for-tat tariff battle would be needed in future.On Monday this week, Trump threatened to impose a 25% percent tariff on Mexico until drugs, including fentanyl, and undocumented immigrants “stop this Invasion of our Country”. He declared that Mexico and Canada should use their power to address drug trafficking and migration and, until they do, “it is time for them to pay a very big price!”The following day, Sheinbaum suggested Mexico could retaliate with tariffs of its own.On Wednesday, however, the conversation between Sheinbaum and Trump was “very kind”, the Mexican president said. She said she told Trump of the various migration initiatives her government has undertaken, including providing resources and support to central American countries and to migrants arriving in Mexico. Potential immigrants “will not reach the northern border, because Mexico has a strategy”, Sheinbaum said.Trump “recognized this effort” by the Mexican government, Sheinbaum added.She also said Trump expressed interest in the government-driven programs to address fentanyl addiction and overdoses in Mexico. And she raised the problem of American-made weapons entering Mexico from the US to be used by drug cartels.Sheinbaum further added that she encouraged Trump to stop the blockades against Cuba and Venezuela, since “people suffer and it leads to the phenomenon of migration”.Asked by a reporter from Rolling Stone magazine that quoted anonymous Trump-aligned sources discussing a “soft invasion” of Mexico by deploying the US military inside the country against drug trafficking groups, Sheinbaum dismissed the idea, calling it “entirely a movie”.“What I base myself on is the conversation – the two conversations – that I had with President Trump, and then, at the moment, the communication we will have with his work team and when he takes office,” Sheinbaum said. “We will always defend our sovereignty. Mexico is a free, independent, sovereign country – and that is above everything else.” More