‘Dumbest trade war in history’: US reacts to Trump’s tariffs

US business leaders are offering a mixed reaction to steep trade tariffs that Donald Trump’s administration has imposed on Canada, Mexico and China, as the editorial board of the Wall Street Journal called it “the dumbest trade war in history”.

Trump hit Canada and Mexico with a 25 per cent tariff on imports, and China with 10 per cent on Saturday in a move that launched a new era of trade wars between the US and three of its largest trading partners. The tariffs against Canada exclude oil and energy products.

Trump said on his own Truth Social social media platform that he had used emergency powers to issue the tariffs, due to come into effect on Tuesday, “because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl”.

The Journal said: “Mr Trump’s justification for this economic assault on the neighbours makes no sense.”

It added: “Drugs may be an excuse since Mr Trump has made clear he likes tariffs for their own sake”, pointing to Trump’s comments on Thursday that the US doesn’t need oil or lumber from its neighbours.

“Mr Trump sometimes sounds as if the US shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home,” the editorial continued. “This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr Trump may soon find out.”

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Trump reacted strongly to the outlet’s editorial position, posting on Truth Social that “a ‘Tariff Lobby’, headed by the Globalist, and always wrong, Wall Street Journal, is working hard to justify Countries like Canada, Mexico, China, and too many others to name, continue the decades long RIPOFF OF AMERICA, both with regard to TRADE, CRIME, AND POISONOUS DRUGS that are allowed to so freely flow into AMERICA.”

Larry Summers, treasury secretary under president Clinton, called the impending tariffs “a self-inflicted supply shock”.

“It means less supply because we’re taxing foreign suppliers. And that will mean higher prices and lower quantities,” Mr Summers told CNN. “This is a self-inflicted wound to the American economy. I’d expect inflation over the next three or four months to be higher as a consequence, because the price level has to go up when you put a levy on goods that people are buying.”

Kirsten Hillman, Canada’s ambassador to the US, told ABC’s This Week that Trump’s tariff move “is disrupting to an incredibly successful trading relationship”.

Mexican president Claudia Sheinbaum ordered retaliatory tariffs in response to the US decision to slap tariffs on all goods coming from Mexico, saying her government sought dialogue rather than confrontation with its trade partner to the north.

Canada’s prime minister said the country would put matching 25 tariffs on up to $155 billion (€150 billion) in US imports. China’s ministry of commerce said it would file a lawsuit with the World Trade Organisation for the “wrongful practices of the US”.

But some US business leaders have reacted neutrally to Trump’s tariffs that the Budget Lab at Yale University estimates would cost the average American household $1,000 to $1,200 in annual purchasing power.

Gregory Daco, chief economist at the tax and consulting firm EY, calculates the tariffs would increase inflation, currently running at 2.9 per cent, by 0.4 per cent and cut US GDP by 1.5 this year.

William Reinsch, a former US trade official now at the Centre for Strategic and International Studies, said many companies had stocked up on imported goods in advance of time to avoid the tariffs and would be able to draw on existing inventories.

The US Chamber of Commerce business group warned that the tariff policy was wrong-headed and would cause economic harm to Americans.

The group’s senior vice-president John Murphy said: “The president is right to focus on major problems like our broken border and the scourge of fentanyl, but the imposition of tariffs under IEEPA is unprecedented, won’t solve these problems, and will only raise prices for American families and upend supply chains.”

Senior US Democrats have slammed the plans. Chuck Schumer, the minority leader in the US senate, led the charge by saying the president’s threatened tariffs would likely “hit Americans in their wallets”. “It would be nice if Donald Trump could start focusing on getting the prices down instead of making them go up.”

Mr Schumer added that the White House should set its sights on “competitors who rig the game, like China, rather than attacking our allies”.

Ken Martin, who was chosen to be the next chair of the Democratic National Committee on Saturday, said that blanket tariffs would cost working families while Trump would ensure that corporations get a pass.

“He’s using American workers as pawns in his petty political games. If a president promised that they’d help my family get by, and then they did this, I’d be pretty pissed off. So, you should be pissed off,” Mr Martin said in a statement.

Trump made a rare concession to his detractors on Sunday, admitting that there could be negative consequences of his hostile act. On his Truth Social feed, he said: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.” – Guardian