Homeless people are seen in San Francisco, California, as the city is fighting with fentanyl problems, February 26. 2024. /VCG
Mexico, Canada, and China are major trading partners of the United States. The Trump administration has announced tariffs on these countries, hoping to use trade barriers as a bargaining tool to compel them to accept US demands in addressing the fentanyl issue and illegal immigration. Currently, the US has used temporary suspension of tariffs on Mexico and Canada as leverage to secure certain concessions from both countries.
But what results can this "tariff hammer" achieve? It is more likely to backfire. The long-standing trade deficit of US cannot be resolved in just one or two years. Trade imbalances are primarily driven by broader economic factors such as national savings rates, government spending, and consumption patterns, rather than the direct impact of tariffs on imports. During Trump's first term, the large-scale imposition of Section 301 tariffs on China failed to significantly reduce the overall US trade deficit. Imposing additional tariffs on major trading partners now is also unlikely to bring about a substantial reduction.
Furthermore, wielding the "tariff hammer" against foreign countries will not create a security barrier to stop illegal immigration or fentanyl abuse. Under WTO rules, China and other members have the right to challenge the Trump administration's tariff measures through the WTO dispute settlement mechanism, where expert panels are likely to issue rulings unfavorable to the US.