Even before he takes office, US president-elect Donald Trump is making policy statements. His latest is an intention to apply tariffs on imports from China, Mexico and Canada as he enters the White House.
He has threatened to impose tariffs of 25 per cent on goods coming from Mexico and Canada, accusing both of failing to control the flow of illegal migrants and drugs into the US. China, meanwhile, is targeted for additional tariffs of 10 per cent above and beyond those already in place, with Trump saying that Beijing had not acted to stop “massive amounts of drugs, in particular Fentanyl,” a potent synthetic opioid, being sent to the US.
Whether this is in part a negotiating tactic, hoping for early concessions as he takes office, is debatable. The identification of drugs and illegal migration indicates that Trump, in office, sees national security as a legal route to use executive orders to impose initial tariffs, rather than relying on Congressional approval.
As Trump’s senior aides threaten to also move quickly to expel illegal migrants, a period of uncertainty and turmoil can be expected. How Trump balances this with his desire not to upset the financial markets remains to be seen.
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A warning yesterday from Germany’s economy minister, Robert Halbeck, that Europe must also prepare for tariffs is correct. On the campaign trail, Paschal Donohoe, the Minister for Public Expenditure, in response to questions about the Trump statement, said that he had been making the case for budget surpluses and two new national funds in case corporate tax revenue fell.
Two policy issues await as government formation starts after the election. The first is the potential impact on the public finances. This must be specifically allowed for in scenario planning in the new government’s programme. The second policy issue is trade diplomacy. Ireland will wish to retain bilateral contacts with Washington, but will know – as the German economy minister said– that in the face of tariffs threats, from the US, the EU must stick together.