Defying the dire predictions from the liberal elites once again, President Donald Trump’s tariff-based leadership strategy emerged victorious on Monday. In return for Trump’s agreement to delay the implementation of tariffs on their countries’ exports to the United States, the leaders of Canada and Mexico separately agreed to Trump’s demands that they take serious measures to close their borders to illegal immigrants seeking to enter the United States, and to stop the drug cartels from bringing in the large quantities of fentanyl which have been killing 75,000 Americans a year.
The commitments that Trump received to help secure the U.S. border were the latest in a breathtaking series of successes during Trump’s first three weeks as president, systematically dismantling the failed policies of the Biden administration, beginning the process of deporting thousands of dangerous criminal illegal aliens, and exposing and eliminating the vast amount of waste and corruption embedded in the federal government.
While Trump was bending the leaders of Mexico and Canada to his will, his secretary of state, Marco Rubio, was putting José Raúl Mulino, the president of Panama, on notice that the U.S. will not tolerate continued Chinese “influence and control” over the strategically vital Panama Canal. Trump’s special envoy, Richard Grenell, was visiting Caracas to convince Venezuela’s anti-American strongman to take back deported members of the Tren de Aragua gang and other Venezuelan illegal aliens who have been terrorizing American cities, and to bring home with him six American citizens who were being detained in Venezuela. On Trump’s orders, Elon Musk, acting as the head of the new Department of Government Efficiency (DOGE), shut down the U.S. Agency for International Development (USAID) after his investigation revealed that it was dispensing billions of dollars of U.S. foreign aid to people and agencies around the world that should not have been receiving it. The day after Trump convinced the leaders of Canada and Mexico to cooperate with his efforts to help secure America’s borders, the president met in the White House with Israel’s visiting prime minister, Binyomin Netanyahu, to map out their joint strategies for the next phase of the Gaza cease-fire agreement and the return of the October 7 hostages, both alive and dead, who are still in Hamas custody; how to deal with a weakened but still dangerous Hezbollah, and Iran’s nuclear threat.
Throughout Donald Trump’s 2024 presidential campaign, he kept saying that he intended to use 25% tariffs on imported goods both to generate more government revenue to pay for his proposed tax cuts, and as a tool to put an end to the unfair advantages enjoyed by many of America’s largest trading partners which is responsible for this county’s huge trade deficit.
Until the moment when President Trump announced over the weekend that new 25% tariffs on Canada and Mexico and a 10% tariff on China would go into effect on Tuesday of this week, many leaders on Wall Street, in Washington, D.C., and in foreign capitals around the world doubted that he would actually carry out his threat, because it was likely to trigger retaliatory tariffs on American exports and could lead to an all-out international trade war.
TRUMP IS NOT BLUFFING
The fact that Trump went ahead with the tariffs anyway proved that he is serious about upending the ground rules that have dominated U.S. international trade relations since the end of World War II. Trump has made it clear that he will no longer allow our allies and enemies to continue taking unfair advantage of the United States in the name of fostering global trade. Trump is not afraid of igniting a tariff trade war because he is convinced that the American economy is strong enough to withstand the resulting short-term economic pain, in the form of higher prices for many imported goods. But at the same time, Trump was careful to reduce the tariff on imported Canadian oil to 10%, to avoid increasing the cost of Canadian energy to American consumers, which would have broken his central campaign promises.
Trump justified imposing the tariffs on Canada and Mexico immediately because of the urgent need to stop the illegal flow of fentanyl which is killing 75,000 Americans a year, as well as the organized trafficking of millions of illegal migrants crossing America’s open borders with Mexico and Canada each year during the Biden administration.
Howard Lutnick, President Trump’s nominee for commerce secretary, and one of his key economic advisors, said last week that the governments of both Canada and Mexico “are acting swiftly” in an effort to persuade Trump that the tariffs he was trying to impose upon them were unnecessary.
In response to Democrat critics who claimed that the tariffs would increase inflation by raising the cost to Americans of imported goods, Trump argued that they would provide a powerful incentive for greater foreign investment in the American economy, leading to a revival of the long-depressed domestic manufacturing sector and the creation of many new high-paying jobs for his working-class voters.
TRUMP PROMISES THAT HIS TARIFFS WILL BE WORTH THE PRICE
Trump also reluctantly admitted that American consumers were likely to see some higher prices in the short term due to the tariffs, but that those consumers would ultimately benefit much more from the resulting strong growth of the American economy. “Will there be some pain?” Trump asked rhetorically. “Yes,” he answered. “Maybe (and maybe not!). But we will make America great again, and it will all be worth the price!”
Trump also justified the tariffs as a necessary response to the fact that “the United States has been ripped off [economically] by almost every country in the world.”
Economists at Goldman Sachs had estimated the Trump’s proposed original tariffs on Canada and Mexico would increase consumer prices by 0.7% and reduce the U.S. economy’s annual growth rate by 0.4%. They also predicted that the impact of the U.S. tariffs on Mexico and Canada would be much greater than their impact on the American economy, and might cause both Mexico and Canada to fall into a recession.
The U.S. auto industry would have been particularly hard hit by Trump’s proposed tariffs on imports from Canada and Mexico, because its supply chain for essential auto parts is heavily dependent on factories in Canada and Mexico.
This was not the first time that Trump had proposed a 25% tariff on goods imported from Mexico. During his first term as president, he used that threat to start negotiations for the revision of the Clinton-era North America Free Trade Agreement (NAFTA) between the U.S., Mexico and Canada, which eventually led to the signing of the much-improved United States–Mexico–Canada Agreement (USMCA) which was signed in 2019.
At that time, Deutsche Bank economists estimated that if the 25% tariff on goods from Mexico had gone into effect, it would have raised the average price of a new car by $1300, and would reduce annual sales in the United States by 18%, or three million vehicles. That is why auto industry executives feared that the tariffs on imports from Canada and Mexico that Trump had announced last weekend would have led to much higher car prices, putting them beyond the financial reach of many would-be American new car buyers.
CANADA AND MEXICO DROP THEIR WARNINGS OF RETALIATION
In response to Trump’s original tariff proposal, Canada’s lame-duck prime minister, Justin Trudeau, was quick to announce retaliatory tariffs on hundreds of different goods that Canada imports from America which are worth $107 billion a year. Canadian government-owned liquor stores in the provinces of Ontario and Nova Scotia reacted to the tariffs by removing all American-made alcoholic products from their shelves, and David Eby, the premier of British Columbia, announced that he would end the sale of all alcoholic products in his province made in the “red states” in the United States that voted for Trump for president in last November’s election.
Mexico’s president, Claudia Sheinbaum, also warned that if the tariffs that Trump announced against her country went into effect, Mexico would implement a “Plan B” consisting of unspecified retaliatory “tariff and non-tariff measures” against the United States. However, when Sheinbaum spoke with Trump on the phone Monday morning, she offered to permanently deploy an additional 10,000 troops from Mexico’s National Guard to close the border with the United States to illegal immigrants. That persuaded President Trump to delay his proposed tariff on Mexico for a month, while negotiations continue between the two countries to reach an agreement on that issue. After their conversation, Trump told reporters in the Oval Office that he had “a great conversation with [the leader of] Mexico.”
Mexican President Sheinbaum told reporters that Trump had agreed to the establishment of two high level working groups with U.S. officials to discuss security and trade issues between the two countries. She also said that the U.S. would take further actions to prevent the trafficking of high-powered weapons into Mexico.
But during their first phone conversation that same morning, Trump and Trudeau were unable to reach any kind of compromise agreement on the tariffs that Trump had proposed, and there was little hope being expressed that their second conversation scheduled for later that day would break the impasse and prevent the tariff on Canadian goods from going into effect Monday evening at midnight, as Trump had previously announced.
After his first conversation with Trudeau, Trump complained to reporters that “We are not being treated well by Canada,” and gave as an example the fact that American banks are not permitted to do business in Canada. Trump also said that the U.S. really should not need help from Canada in order to make its new cars, grow its agricultural products or supply the lumber with which to build American houses.
Trump has often said in the past that he would much prefer to see automakers producing cars for the American market by manufacturing them in American factories, with American workers.
In an interview with Fox News shortly after the first phone conversation between Trump and Trudeau that day, Trump’s senior trade advisor, Peter Navarro, summed up the difference between the two sets of tariff negotiations by explaining that Mexico’s president understood that Trump is primarily involved in fighting a drug war on the border, while Trudeau erroneously believed that Trump wants to start a trade war with Canada.
Canadian leaders argued that Trump was wrong to claim that the tariff was necessary to protect America’s northern border because the number of immigrants illegally entering the U.S. from Canada was much smaller than the number crossing the border from Mexico. Trump and his supporters responded to that argument by pointing to the sharp recent increase in the amount of fentanyl being smuggled across the northern border, as well as the dozens of immigrants who had crossed the northern border from Canada whose names were on the U.S. government’s terrorist watch list, posing a significant national security risk.
A few hours later, at about 3 p.m. Monday, Trump and Canadian Prime Minister Trudeau held their second phone conversation of the day. Fortunately, Trump was able to make Trudeau see the light, by convincing him that it was very much in Canada’s best interest not to test Trump’s determination to go through with his tariff threat. In return for a 30-day delay in the proposed tariff, Trudeau gave in to Trump’s demands by agreeing that Canada would institute a series of initiatives to shut down the flow of fentanyl and prevent known terrorists from entering the U.S. across the northern border.
Thus Canada’s Trudeau and Mexico’s Sheinbaum joined Colombia’s president, Gustavo Petro, who backed down a week earlier in the face of similar threats by Trump to destroy his country’s economy with punitive tariffs, unless he agreed to accept the return of deported illegal Colombian immigrants. Trump’s tariff threat was so effective that President Petro, in the end, volunteered to supply his own presidential plane to fly the deported Colombian immigrants back to their native country.
TRUMP’S TRIUMPHANT DECLARATION OF VICTORY
Trump triumphantly announced the agreement he reached with Trudeau to his supporters with the following message:
“Canada will implement their $900 million border plan, and, as per Prime Minister Trudeau, will be ‘reinforcing the border with new choppers, technology, and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl.
“’Nearly 10,000 frontline [Canadian] personnel are, and will be, working on protecting the border. In addition, Canada is making new commitments to appoint a Fentanyl Czar. We will list cartels as terrorists, ensure 24/7 eyes on the border, and launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl, and money laundering. I [Trudeau] have also signed a new intelligence directive on organized crime and fentanyl, and we will be backing it with $200 million,’ to fund fresh Canadian intelligence-gathering efforts on the fentanyl and drug trade.”
Trump then added, “As President, it is my responsibility to ensure the safety of all Americans, and I am doing just that. I am very pleased with this initial outcome, and the tariffs [I] announced on Saturday will be paused for a 30-day period to see whether or not a final economic deal with Canada can be structured.”
“FAIRNESS
FOR ALL!”
Trudeau then issued his own message in which he began by saying “I just had a good call with President Trump,” and confirmed that the “proposed tariffs will be paused for at least 30 days while we work together.”
Trudeau said that Canada had already launched a $1.3 billion border-tightening plan calling for the deployment of new technology and more border guards, as well as two Blackhawk helicopters and 60 U.S. made drones to improve border surveillance.
Trudeau is a very unpopular ruler. He has already agreed to step down as prime minister, and his Liberal party is expected to lose the next Canadian national election. Nevertheless, Trudeau’s main political opponent, Pierre Poilievre, the leader of the Conservative party, joined him in calling for a dollar-for-dollar retaliation against Trump’s proposed tariff and seeking more Canadian trade with other countries “to make us [more] self-reliant.”
When Trump first proposed the 25% tariffs on Mexico and Canada, he also announced an additional 10% tariff on goods imported from China because it has failed to stop exporting chemicals to the Mexican drug cartels, enabling them to produce the fentanyl which has been killing 75,000 Americans a year. Trump also said that he would discuss the problem in a phone call with China’s President Xi Jinping.
TRUMP CLOSES A LOOPHOLE IN TARIFFS ON CHINA
At the same time, Trump also announced that he was closing a loophole in the current rules which exempts from tariff payments any direct online purchase worth less than $800 by an American consumer from a marketing company in China, such as Temu and Shein, which has given them an unfair price advantage over American marketers.
Trump’s current tariff proposals are much broader than those he imposed during his first term as president. Those tariffs were primarily focused on the $380 billion worth of annual U.S. imports from China. Trump’s efforts to force China to begin abiding by the international rules of fair trade were widely applauded at that time, even by some of his political opponents, because China has been flouting those rules for decades.
The tariffs that Trump had proposed would have impacted $1.4 trillion worth of U.S. imports annually, mostly falling upon America’s neighbors, Canada and Mexico. Trump’s first-term tariffs were more narrowly directed at specific economic issues. These included China’s refusal to respect the intellectual property of American businesses doing business in China, and China’s predatory export pricing practices. During his first term, Trump also imposed narrow tariffs on imports of steel and aluminum in response to complaints from domestic producers that their foreign competitors in Canada, Mexico, the EU, Australia, Argentina, Brazil, and South Korea were “dumping” their steel and aluminum on the American market at below cost prices.
This time Trump is using a different federal statute, the International Emergency Economic Powers Act (IEEP), as the legal basis for his tariffs. IEEP expands upon Section 232 of a 1962 trade law which gave the president the power to impose tariffs in response to a national security threat. One of the main differences is that IEEP tariffs can be implemented immediately, whereas a Section 232 tariff requires a lengthy preparatory investigation and reporting process. In addition, the potential scope of IEEP tariffs is unusually broad. It enables Trump to wage economic war against targeted countries with little advance notice, and makes it much more difficult to be blocked by Trump’s Democrat opponents in Congress or through court challenges.
During his first term as president, Trump used the IEEP law twice, once to impose tariffs on Venezuela’s state-owned oil company to cut off the cash flow to the anti-American government of President Nicolas Maduro, and a second time to punish Iran for its aggressive actions. According to a report by the Congressional Research Service various presidents have used the IEEP to declare national emergencies on 69 occasions.
During his first term as president, Trump gave the countries he threatened with tariffs adequate time to make their case before the tariffs took effect. But this time, Trump gave Canada, Mexico, and China just a few days of advance notice. Trump said he had to move more quickly because the Biden administration’s open border policies had created an urgent need to stop the deaths of many Americans from the fentanyl that is being smuggled into this country alongside the illegal immigrants.
TRUMP WANTS TO USE TARIFFS AS A SUBSTITUTE FOR INCOME TAXES
During his 2024 presidential campaign, Trump said repeatedly that he envisioned the new tariffs he intended to impose on a broad range of imported foreign goods becoming a permanent source of federal government income. It will substitute for the tax revenues that will be lost due to Trump’s proposed elimination of the income taxes on tips, overtime pay, and Social Security benefits, and the permanent re-authorization of Trump’s 2017 tax cuts, which are set to expire later this year.
Since taking office three weeks ago, President Trump has been much more aggressive than his White House predecessors in using America’s tremendous economic clout to achieve his policy goals. As explained by a Trump White House statement released over the weekend: “Previous Administrations have failed to leverage America’s combination of exceptional strength and its unique role in world trade to advance the security interests of the American people. President Trump has not.”
WHO PAYS FOR TARIFFS?
If the new Trump tariffs had gone into effect and remained in place, American consumers would have quickly felt the impact of rising prices for the various types of foods that are imported from Mexico and Canada. Mexico supplies the American market with 80% of its avocados, most of its cherry tomatoes, and the alcoholic drink known as tequila. The tariff on Canada would have raised prices in many restaurants because Canada is the primary source of frozen french fries. Canada also supplies most of the lumber used by the American housing construction industry, as well as other construction materials, which means that Trump’s tariff would have increased the cost of new homes and major home renovations.
Typically, the cost of a tariff is paid by the product’s importer, who will usually try to pass the cost along to their retail customer or end-user in the form of higher prices. But Trump is hoping for another possible outcome, that the savings from avoiding his tariff will make it economically feasible for the companies involved to shift the production of their products to factories in the United States, thereby revitalizing the manufacturing sector of the economy and creating good paying jobs for blue-collar American workers.
According to Trump’s trade advisor Navarro, there is another possible outcome, based upon what happened when Trump raised tariffs on imports from China during his first term as president. Rather than risk losing their American market share, some Chinese companies decided to keep the price of their products in America unchanged by absorbing the cost of Trump’s tariffs themselves, and other companies who were making their products in China at that time were able to avoid the need to raise their prices in the U.S. marketplace by moving their production operations to a factory in a different country which was not subject to the Trump tariff.
WHY TRUMP 2.0 IS SO MUCH MORE EFFECTIVE
Meanwhile, many observers have been asking why Trump has been so much more effective as president this time than he was during his first term. The most important difference appears to be his enhanced ability to use his political skills and insights to outmaneuver his political opponents, and his skills as a master dealmaker to intimidate and persuade the leaders of Canada, Mexico, and Columbia to agree to his demands.
Trump has returned to the White House much wiser and more experienced than he was during his first term. He has been toughened by the defeat that he never accepted in the 2020 presidential election, and the next four years, during which he overcame false criminal accusations with which his political opponents tried to prevent him from running for president again.
Trump has demonstrated that he is at least a cut above any of his political opponents. Under his leadership, the GOP has replaced the Democrats as the party of the people. Trump also has a clear presidential agenda. He knows exactly what he wants to do, and has moved very rapidly to repair the damage Joe Biden wrought as president over the past four years to the integrity of the federal government.
After narrowly surviving an assassination attempt last summer, Trump is more determined than ever to fulfill what he firmly believes is the presidential destiny for which Hashem spared his life. He is working to Make America Great and respected again by restoring the pride and faith of its people in America’s democratic heritage, and their belief in its founding moral and religious principles.
