Trump Just Took His Tariffs Threat to a Catastrophic Level
Donald Trump used his speech at Davos to threaten a global trade war.
Donald Trump told an audience at the World Economic Forum in Davos, Switzerland, Thursday that every international business needs to make their products in the United States, or face tariffs.
“My message to every business in the world is very simple: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth,” Trump said in a speech livestreamed from Washington, D.C. “But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff.”
Trump’s tariff threats have not been welcomed by world leaders, especially countries such as Canada and Mexico. The president on Thursday again floated annexing Canada as the fifty-first U.S. state by using tariffs as leverage. He has previously threatened to enact tariffs against Mexico unless the country stops sending “Crime and Drugs” across the border.
On Tuesday, Trump threatened a 10 percent tariff against China “based on the fact that they’re sending fentanyl to Mexico and Canada,” and said he was considering tariffs against the European Union over a $350 billion trade deficit. But at Davos, these threats did not go over well.
“Tariffs against friends and allies is a crazy idea,” Finland’s Foreign Minister Elina Valtonen told The Wall Street Journal. Likewise, the head of the World Trade Organization, Ngozi Okonjo-Iweala, said tariffs would hurt global growth and could result in retaliatory tariffs, with devastating results.
“If we have tit-for-tat retaliation, whether it’s 25 percent tariff (or) 60 percent, and we go to where we were in the 1930s, we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” Okonjo-Iweala said at Davos Thursday.
Trump isn’t likely to listen to criticism over his tariff plans, even as economic experts say they will hurt the country, particularly areas that engage in cross-border trade like Texas. While he might engage in specific carve-outs for his corporate friends, for the most part, Trump plans to plow ahead with tariffs regardless of their devastating effects on the U.S. economy.