(A)Political February 1st

Good morning everyone,

I’d like to feature a newsletter publication that doesn’t talk about Trump for once, but that’s not possible for this week.

Trump has hit the ground running in his first full week back in office, and tariffs are on his mind. Starting today, the US is enacting tariffs against China, Canada, and Mexico. Blue states are suing for the right to keep birthright citizenship. Per Trump’s signing of the Laken Riley Act, the ‘worst’ illegal alien ‘offenders’ will be housed in Guantanamo Bay.

• Trump Tariffs Expected to Hit China, Mexico & Canada

• Blue states Are Suing For The Right to Keep Birthright Citizenship

• Guantanamo Bay is Set to House ‘Worst Offender’ Illegal Immigrants

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Tariffs Hit Today

_{By: Atlas}

President Donald Trump is poised to impose broad new tariffs on imports from three of America's largest trading partners - Mexico, Canada and China - starting on February 1st. The move marks a definitive escalation in Trump's protectionist trade policies as he begins his second term and seeks to reshape U.S. economic relationships abroad.

The tariffs, which White House officials confirmed will take effect today, include a 25% levy on imports from Mexico and Canada and a 10% tariff on goods from China. Trump has threatened the duties over what he says is a failure by those countries to sufficiently crack down on illegal immigration, drug trafficking, and trade imbalances with the United States.

"I was just with the President in the Oval Office, and I can confirm that tomorrow the Feb. 1 deadline that President Trump put into place remains," White House Press Secretary Karoline Leavitt told reporters on Friday, disputing media reports that the tariffs could be delayed.

Potential Economic Fallout

The looming tariffs have stoked fears of retaliatory measures and a spike in costs that could ripple through supply chains and undermine continental trade pacts. Economists warn the duties threaten to raise prices for American consumers, disrupt manufacturing that relies on imported components, and invite tit-for-tat responses from trading partners.

In the first 11 months of 2024, U.S. trade with Canada totaled $699 billion and with Mexico $776 billion, underscoring their deep economic integration with the United States. The 25% tariffs on Mexico and Canada would likely have outsized impacts on particular industries, such as automobiles and energy, where cross-border commerce and supply chains are especially intertwined.

Canada supplied over half of U.S. crude oil imports in 2023, a flow now at risk of disruption and higher costs if fully subjected to Trump's 25% tariff. Trump said that oil could potentially be exempted from the duties but that a decision had not yet been made.

Strained Neighbor Relationships

Trump's tariffs also stand to further strain America's relationships with its two closest neighbors and biggest export markets. The announcement comes just weeks after President Trump and Mexican President Alejandro Moreno clashed over immigration policy at a summit in Washington, a sign of deteriorating ties between the countries.

Prime Minister Justin Trudeau said Canada's government would "not hesitate" to retaliate against any U.S. tariffs, and that Ottawa would work to support affected industries and regions. But Ontario Premier Doug Ford called for a more aggressive response, saying Ottawa must prepare "dollar-for-dollar" retaliatory duties on the U.S.

The brinksmanship additionally jeopardizes the U.S.-Mexico-Canada trade agreement that took effect in 2020, undermining regional commercial ties even as the pact comes up for review in 2026. Trump has ordered his administration to study "overall trade issues and tariffs" affecting the U.S. by April 1st, potentially paving the way for him to either trigger new duties or abandon the USMCA entirely.

Tensions With China Build

While the imminent Feb. 1st duties spare China the 25% tariff hitting Mexico and Canada, the 10% levy on Chinese goods marks another flare-up in the world's biggest bilateral trade relationship. It follows an initial "Phase 1" deal and subsequent negotiations during Trump's first term that de-escalated a bruising trade war but left many disputed issues unresolved.

Trump has already ordered his administration to probe whether Beijing complied with the terms of that earlier agreement, an inquiry that could culminate in renewed tariffs on the Asian manufacturing powerhouse. The U.S. trade deficit in goods with China stood at $321 billion through November 2024.

American business groups have urged the White House not to revive a cycle of tariffs and counter-tariffs with China, warning that a return to trade hostilities risks damaging the U.S. economy and companies navigating an already challenging post-pandemic landscape. But Trump faces competing pressures from domestic industries and labor groups who favor a more combative posture to counter perceived Chinese trade abuses.

Sectoral Duties Loom

Even as Trump moves ahead with tariffs on China, Canada and Mexico to start February, he is simultaneously preparing to wield duties more surgically against specific sectors. The President has promised new levies on an array of imported goods including pharmaceuticals, semiconductors, steel, aluminum and copper.

Because such tariffs would likely apply to imports from many countries, they stand to entangle a much broader web of U.S. trading relationships beyond just North America and China. Governments and industries are bracing for potential duties and mobilizing to lobby Washington in hopes of winning exemptions or reprieves.

Foreign officials fear that the deluge of trade restrictions under consideration, if enacted, would trigger a domino effect of protectionist barriers worldwide at a precarious time for the global economy. With sluggish growth and debt challenges plaguing many countries in the wake of the COVID-19 crisis, a retreat into economic nationalism could deepen the malaise.

Trump's Lasting Trade Legacy

As President Trump launches his second term with an assertive display of unilateralism on trade, he continues to upend a decades-old consensus in favor of open markets and collective rules embodied by institutions like the World Trade Organization. Over four years, Trump's "America First" ethos translated into an unrelenting series of tariffs, renegotiated trade deals, and bitter feuds with close allies.

Traditional bastions of free trade such as the U.S. Chamber of Commerce have called for rebuilding partnerships and lowering trade barriers, but Trump's actions point to a doubling down on go-it-alone policies that could outlast his presidency and define a new era of sputtering globalization. For the 76-year-old president, trade has always been zero-sum - and tariffs the tools for putting "America First."

Yet the economic legacy of Trump's trade offensive remains hotly debated even within his own party. Some Republicans have embraced his pugilistic approach as an overdue correction in an international commercial landscape tilted against American workers and businesses. But others see Trump's tactics as increasingly counterproductive and costly to the U.S. economy.

What seems clear is that Trump's imprint on trade policy, cemented over a turbulent first term and now hardening at the outset of a second, appears indelible. The lines have been redrawn and the status quo upended. And as he pulls the tariff trigger on Mexico, Canada and China, a new chapter of economic uncertainty dawns.

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