Donald J Trump, the 47th president of the US, is the first president who has used emergency decrees to conduct domestic and foreign policy. He declared a national emergency under the International Emergency Economic Powers Act and National Emergencies Act, which allow the president sweeping powers to impose sanctions to address crises such as introducing tariffs.
His opponents accuse him of using his special powers, given by the Constitution, to act like a Roman emperor as he also vows to seize the Panama Canal, Greenland and now the Gaza Strip.
One of the first of Trump’s controversial actions was ordering soldiers to the US-Mexican border to round up illegal immigrants to deport them on military planes, already to Colombia and India. Trump has also dissolved the US Agency for International Development (USAID), which was established by statute as an independent agency via Congress in 1998 after being created by executive order in 1961 by President John F Kennedy. According to the news, at least 10,000 officials are being put out of their jobs. Most of the agency’s the US overseas employees have been placed on leave and ordered to return to America.
Trump has also vowed to dissolve the Education Department. This Department distributes about USD 30 billion a year to low-income college students via the Pell grant program and manages a USD 1.6 trillion student loan portfolio. Two of the biggest funding programmes of the Education Department for K-12 schools are the Title I programme, which is meant to help educate children from low-income families, and the IDEA programme, which provides schools with money to help meet the needs of children with disabilities.
Trump did announce that “emergency” measures would remain in place until the crises over deadly fentanyl smuggling and illegal immigration to the US end.
Alex Capri, senior lecturer at the National University of Singapore Business School, said the trade war Trump is initiating could spiral out of control and “end very badly if nobody backs down. We can have a tit-for-tat, which would be an absolute disaster,” he told CNA.
Trump's tariff war with the country’s top three trading partners could upend global supply chains and push prices higher in the coming months, say observers. On Saturday, 1 February, Trump was ready to impose 25% tariffs on Mexican and Canadian imports, excluding Canadian energy resources that would have a lower 10% tariff. He also hit China with a 10% tariff in addition to levies already in place. However, after discussions with the country’s leaders these have now been postponed for Mexico and Canada while small Chinese packages are now excluded.
Analysts told CNA that while Trump is threatening steep tariffs as a weapon to address a whole variety of issues, most of these will not actually be solved by the levies themselves.
BBC reported Chinese officials struck back at the United States on 4 February by selecting some US goods for new Chinese tariffs of up to 15%. These include coal, liquified natural gas, crude oil, agricultural machinery and pickup trucks. Moreover, the Chinese Ministry of Commerce said as they rolled out a series of retaliatory measures to counteract Trump's planned tariffs, "China firmly opposes the US practice and urges the United States to correct its wrong practices immediately."
The tariffs that President Trump is threatening to impose on Canada, China and Mexico, the country’s three largest trading partners, could cost the average American household USD 1,200 a year at a time when many are desperate for lower prices that were promised by Trump after years of inflation eating away at their bank accounts, some analyst said.
However, ABC news reported that Trump and Chinese President Xi Jinping were expected to talk in the next couple days. It was unclear whether that discussion would happen prior to the Chinese tariffs going into effect. Beijing commerce officials also called the US tariffs "typical unilateralism and trade protectionism"
China said it brought the US tariffs to the WTO dispute settlement mechanism. "The US practice seriously undermines the rules-based multilateral trading system, undermines the foundation of economic and trade cooperation between China and the United States and disrupts the stability of the global industrial chain and supply chain," the Chinese Ministry of Commerce said.
Moreover, Trump acknowledged that Americans may feel “economic pain” from his sweeping tariffs, but argued it would be "worth the price" to secure the country’s interests. Yet his unorthodox use of tariffs “will be a tax on American citizens,” said Matthew Holmes, executive vice president and chief of public policy at the Canadian Chamber of Commerce. “It will hurt us; it will also hurt them. They're going to feel it very quickly. It will affect the affordability of everyday goods. It will also profoundly disrupt supply chains that are critical and strategic for America. Those include defence supply chains, telecoms and the microprocessor and chip capacity for their digital revolution.”
According to CNN, Americans have paid more than USD 230 billion to date for tariffs that Trump imposed on imported solar panels, steel and aluminium and Chinese-made goods, according to US Customs and Border Protection. More than half of the duties have been collected during the Biden administration.
In a 2023 study, the US International Trade Commission said, “US importers bore nearly the full cost of these tariffs.” The independent federal agency, which provides analysis to the White House and Congress, estimated that prices increase by about 1% for each 1% increase in the tariffs on steel, aluminium and Chinese-made goods.
Once an import company pays the tariff, it can decide to eat the cost or pass some or all of it along to the buyer – whether that’s a retailer or a consumer. For this reason, it’s more difficult to determine how much of the tariff cost actually ends up being paid by American households. But one study, published in 2020, found that tariffs on washing machines raised the median price of one by about USD 86.
Tariffs, whether imposed by the US or foreign governments, can impact a domestic economy in important ways, both directly and indirectly, affecting consumers, businesses and overall economic activity. Among the most common effects are higher consumer prices. Prices rise because some portion of the additional cost imposed by a tariff is typically passed on to consumers. This means higher prices for consumers for everyday goods.
Furthermore, many companies rely on imported components and raw materials as inputs for their products. Tariffs on these inputs can raise production costs, which may then be passed on to consumers. One example is the US auto industry, which relies heavily on Canadian car parts in the manufacturing process. Another important implication is that tariffs imposed by one country may lead to retaliatory tariffs or other measures by trading partners, raising the possibility of a trade war. This would in turn harm global economic growth and lead to job losses. Analysts say if the proposed 25% tariffs on Canada and Mexico and 10% tariffs on China go into effect, economic output could shrink by 0.4%.
The Chinese Ministry of Commerce has said the US introduction of these tariffs seriously undermines the rules-based multilateral trading system and foundation of economic and trade cooperation between China and the US as well as disrupts the stability of the global industrial chain and supply chain. At the same time, according to some economists, Trump’s protectionism will make Americans the first to pay the price and bear the burden for his economic policies.
