This week, U.S. President Donald Trump signed an executive order to impose new tariffs on Mexico, Canada and China.
Trump claimed thewould “stop the flood of illegal aliens and drugs from pouring across our borders”.
In the past day, the U.S. has reached separate agreements withandto delay the tariffs.
What are tariffs, and why does Trump want to apply them?
Tariffs
A ‘tariff’ is a tax on imports. It’s applied to foreign-made goods brought into another country, and paid by the importer.
It works like this: Country A and Country B make the same product. Country A wants its citizens to buy its own version of the product, not Country B’s, so it applies a tariff.
Importers in Country A now pay the tax when they bring in B’s product, and pass on the cost to consumers, making this version of the product more expensive to buy. This incentivises people to buy the domestically-made product, instead of the imported one.
Trump’s planned tariffs
Over the weekend, Trump signed an executive order to impose new tariffs on the U.S’ three largest trading partners: Mexico, Canada, and China.
Trump said he would impose a 10% tariff on China and 25% on Mexico and Canada.
The tariffs were due to come into effect this week.
Why?
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Trump claimed these countries allow too many undocumented immigrants and illegal drugs into the U.S. He argued applying these tariffs was necessary to ensure the “cooperation and compliance” of these countries to stop the flow of people and drugs.
In a statement, Trump said: “Previous Administrations failed to fully leverage America’s economic position as a tool to secure our borders.”
“Access to the American market is a privilege,” he added.
Agreements
Overnight, it was announced that the tariffs on Mexico and Canada would be delayed after deals were reached.
On Mexico, Trump said steps had been taken to “alleviate the illegal migration and illicit drug crisis,” and therefore the tariffs would be delayed.
He said: “Further time is needed to assess whether these steps constitute sufficient action to alleviate the crisis.”
Canadian Prime Minister Justin Trudeau said he and Trump had a “good” phone call where they struck an agreement to pause the tariffs.
He said Canada would reinforce a “$1.3 billion border plan” with “increased resources to stop the flow of fentanyl”.
Trudeau also said Canada would appoint a government official to oversee the country’s response to fentanyl and list cartels as terrorist groups.
The tariffs on China are still set to take effect as planned.
