SCOTT SIMON, HOST:
President Trump says he will implement steep new tariffs today on goods from Canada, Mexico and China. This is expected to raise the price of those imports for American consumers, and it could also touch off a trade war, to make it harder for U.S. businesses to sell their products abroad. NPR's Scott Horsley joins us. Scott, thanks for being with us.
SCOTT HORSLEY, BYLINE: Good morning, Scott.
SIMON: Certainly a lot of talk about tariffs during the campaign, but there was some feeling among certain analysts that Donald Trump was posturing. Where do things stand today?
HORSLEY: We have yet to see any official tariff order from the White House, and Trump has a long history of threatening tariffs, some of which take effect; some don't. You know, we saw that last weekend when Trump threatened to slap tariffs on imports from Colombia but backed off after Colombia agreed to conditions for accepting deportations from the U.S. So there was some thought maybe Trump would make a similar deal to avoid this round of tariffs, but White House spokeswoman Karoline Leavitt insisted yesterday, this tariff threat is not a bluff.
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KAROLINE LEAVITT: The president will be implementing 25% tariffs on Mexico, 25% tariffs on Canada and a 10% tariff on China for the illegal fentanyl that they have sourced and allowed to distribute into our country. These are promises made and promises kept by the president.
HORSLEY: Trump also wants Mexico and Canada to curb illegal immigration into the U.S. Now, Leavitt did leave the door open for Trump to backtrack on these tariffs if some kind of face-saving agreement's reached. We did see that back in 2019, when Mexico agreed to crack down on immigration from Central America.
SIMON: So recognizing there's a possibility tariffs could be lifted. In the meantime, what kind of effect are they going to have on prices?
HORSLEY: This is a tax on imports. So it's going to raise the price of everything we buy from these three countries, which is a lot. You know, last year, we imported more than 1.2 trillion dollars' worth of stuff from Mexico, Canada and China - everything from TVs and tequila to tomatoes and two-by-fours. The good news is the avocados for your Super Bowl dip next weekend have probably already made it across the border. So that's not going to face a 25% guacamole tax. But, you know, Mexico...
SIMON: First...
HORSLEY: ...Supplies more...
SIMON: ...Things first.
HORSLEY: Yeah, that's right. But Mexico supplies more than a quarter of all the fresh fruit and vegetables we eat in the U.S. Canada supplies a lot of crude oil to Midwestern oil refineries. All those are going to be subject to tariffs. Although Trump did hint the tax rate on Canadian oil could be less than 25%. Whatever the rate, experience shows much of the cost is going to be borne by businesses and shoppers here in the United States.
SIMON: And what are the implications for major U.S. trading partners, especially Mexico and Canada?
HORSLEY: Yeah. It's going to hit them hard as well. The U.S. is a very big market for our next-door neighbors. Canadian Prime Minister Justin Trudeau warned of difficult times ahead for his country. He says Canada doesn't want a trade war, but he added it's not going to just surrender either. You know, Trudeau says Canada is ready to push back with retaliatory tariffs of its own on U.S. exports.
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PRIME MINISTER JUSTIN TRUDEAU: A purposeful, forceful but reasonable immediate response. We won't relent until tariffs are removed. And, of course, everything is on the table.
HORSLEY: Mexico and China are also likely to retaliate. We saw that during the first Trump administration, with other countries putting tariffs on things like Kentucky bourbon and Harley-Davidson motorcycles.
SIMON: Yeah.
HORSLEY: You might remember U.S. farmers lost a lot of business overseas, and the federal government wound up paying some of the farmers for the corn and soybean sales they missed out on.
SIMON: What happened to the free trade agreement with Canada and Mexico that Trump negotiated just a few years ago?
HORSLEY: You know, Trump was no fan of the original North American Free Trade Agreement, but he and his allies did renegotiate that pact the last time he was in the White House. That deal is due for a possible update next year. Some analysts think these new tariffs are just a mechanism for Trump to drag Mexico and Canada back to the bargaining table a year earlier in hopes of extracting more favorable terms.
SIMON: Scott Horsley, thanks so much for being with us.
HORSLEY: Good to be with you. Transcript provided by NPR, Copyright NPR.
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