President Trump’s imposition of tariffs, or the threat of tariffs, has already proven to be a powerful bargaining tool when it comes to trade. President Trump had threatened to impose tariffs on Colombia up to 25% in retaliation for the Colombian government refusing two planes with migrants to land. The article doesn’t elaborate on the plane fiasco, but does say that the two countries came to a resolution as the tariffs would be “held in reserve” unless Colombia breaks their end of the deal. The consequence of the tariffs led to a 40% increase in price for the coffee (the US imports about 30% of its coffee from Colombia).
The tariffs help shed some light on potential issues that could be looming over commodity markets in Canada, Mexico and China. Potential tariffs on imports from these countries is likely to lead to increased volatility around trade in the coming weeks. With Mexico and Canada being the US’s biggest trading partners this could lead to major disruptions in markets that are already experiencing heightened prices.
The main reason why this article caught my attention is because I am still very curious about how tariffs will affect the US and the rest of the world in the coming years. It has already proven to have great effects but there are differing opinions on whether or not the effects are positive or negative and just how far will it be used simply as a threat?
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I also question the use of tariffs as retaliatory tools against other countries. In my view it seems to be a relatively large risk. Take Columbia for example, tariffs against Columbian goods may or may not be effective in getting them to comply with our immigration policy, but the possibility of inflationary effects on products like coffee may not be something the administration wants.
The United States is certainly a global power but it is not like all of the valuable goods come from the US directly. I wonder if the rest of the world might reach a breaking point and decide to work around these tariffs, and essentially cut the US out. It is obviously an extreme but economically it may be the best decision.
Just reaching the one week mark of the new presidential administration we are already able to see a strategy that President Trump is utilizing in attempt to gain leverage in international conflict. The threats of these tariffs that are now becoming a reality is showing what the next four years might have in store. Seeing the impact the Columbian tariffs have made in just mere days makes me wonder what the full impact of the threatened tariffs placed on Mexico and Canada would do to all the economies.
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