The suicidal tariff war

President Donald Trump has confirmed that 25% tariffs on imports from Mexico and Canada will go into effect next week, ending a month-long suspension and sparking fears of an escalation in the North American trade war. “The tariffs are going ahead, on time, on schedule,” Trump said at a press conference alongside French President Emmanuel Macron .

The move, which comes on top of a 10% tariff already imposed on China, threatens to destabilise supply chains and raise prices for American consumers.

The negative effects of this tariff policy are already being felt in various aspects of the US economy. According to estimates by the Tax Foundation, tariffs could reduce US GDP growth by 0.3 percentage points, representing a potential loss of $75 billion in economic output. Furthermore, tariffs on China, Mexico and Canada are projected to increase the average tax burden on US households by more than $800 by 2025, directly affecting consumers' pocketbooks.

The impact on employment is also worrying, with estimates suggesting that tariffs on Canada and Mexico could result in the loss of 269,000 full-time jobs in the US.

Key industries such as automotive, energy and agriculture will be particularly affected. For example, tariffs could reduce Volkswagen's profits by 9% and Stellantis' by 12%, potentially impacting the entire supply chain and employment in the sector.

Inflation is another factor to consider. Gregory Daco , chief economist at EY, estimates that tariffs could increase inflation by 0.5 percentage points this year. More alarmingly, Daco projects that the U.S. economy could contract by 1.5% this year and 2.1% in 2026 as a result of these measures, suggesting a lasting and significant impact on the country’s economic growth.

While Trump argues that these tariffs will generate revenue to reduce the budget deficit, the reality is that the cost will fall primarily on American consumers, retailers and manufacturers. The threat of retaliation from Canada and Mexico only aggravates the situation, putting economic growth and the stability of American trade at risk.

At a time when the global economy is facing multiple challenges, Trump ’s decision to move forward with these tariffs appears to be a step in the wrong direction, threatening not only the prosperity of the US, but also that of its closest neighbors and trading partners. Trump ’s trade war, far from protecting the American economy, is proving to be a self-inflicted blow that could have long-lasting consequences for all involved.