The White House vowed that President Donald Trump’s planned tariffs on Canada, Mexico and China will go into effect on Saturday in a move that triggered fears of a trade war.
The full effects of the tariffs won’t be known until the president outlines his plans and the other countries say what they will do to retaliate. Trump has said he wants 25 percent tariffs on imports from Canada and Mexico and 10 percent on those from China, but he told House Republicans this week that he was targeting certain goods, CNN reported.
If the tariffs are implemented broadly, the Tax Foundation has said it would cost U.S. households $830 this year. Maine would see wide-ranging effects, particularly around Canadian trade that accounts for 70 percent of imports — led by fuel — and 30 percent of exports. Lobster and wild blueberries were caught up in the trade war that Trump kicked off with China in 2018.
The Bangor Daily News spoke to Kristin Vekasi, a University of Maine political scientist and trade expert, on what the next steps will be. Questions and responses have been edited for length and clarity.
We don’t know of any exemptions to the tariffs. We also don’t know how countries will retaliate. But what comes next here?
We don’t know the specific plans, although we do know that countries do have plans for retaliation which they may or may not follow through with.
At the firm level, companies can apply for trade exemptions. I expect that large companies already have plans in place to do so. During the trade war with China, there were a great, great deal of exemptions given both at the sector level and the company level.
It’s also possible that we could see coordinated action from Mexico and Canada via some of the trade institutions, because this is going against multiple trade agreements that we have negotiated and signed. But those cases are so slow. They’re often years long.
If these tariffs are implemented broadly, where do you see Mainers feeling it in prices first?
I think we would see it in produce. As consumers, we are used to some price volatility in those products with seasonality and the price of eggs going up and down.
This might be different with fuel, because fuel prices are a lot more flexible to change and are not as brand dependent. If companies anticipate the tariffs being short lived, they will sometimes swallow the cost so as not to pass it on to consumers, so consumers don’t change their spending habits.
I don’t know what our cushion is because I don’t study that sector, but it could be within a month. I would guess that it would be fairly short term because the border is so close.
This round of tariffs is broader than the last ones that kicked off the Chinese trade war. How do you think this will differ as it trickles down to consumers here?
A lot of American manufacturing happens in the U.S., Canada and Mexico corridor. Maine is not really in that corridor from Michigan to Texas, but a lot of U.S. manufacturing depends on that access. This is disrupting some of the core parts of the US economy.
Another thing is that with Mexico and Canada, we have much more core, difficult-to-substitute products like fuel and food. It’s not that we don’t depend on important things from China, but some of these are things that people experience in a different way and play different roles in our economy, daily lives and markets.
