Trump uses uncertainty on tariffs for leverage

Canada and Mexico are preparing for a crushing economic blow after President Donald Trumpsaid Monday that he was “thinking in terms” of imposing 25% tariffs on both countries on Feb. 1, but that date may not be the one to watch.

In November, Trump said he would impose those tariffs on Day One, which was Jan. 20, but the document he was signing when he made his remarks calls for a comprehensive report on trade to be delivered to him by April 1, setting out his options.

That process will allow American trade and national security officials to have input “in a formal way, rather than the kind of monarchical court that was going on at Mar-a-Lago,” says Eurasia Group analyst Graeme Thompson.

That means that Canada and Mexico will likely have the opportunity to make their case for continued trade before Trump acts, but he is going to be pushing hard for concessions.

The fresh tariff threats should be thought of as “a negotiating tactic,” says Thompson, but that doesn’t mean there won’t be tariffs. “The bottom line is, whether they come today, tomorrow, next week, or next month, Canada is going to have to live with the specter of US tariffs hanging over its head on any issue at any time for the next four years.”

Trump will reportedly use the threats to force Canada and Mexico to renegotiate the USMCA in an attempt to shift auto manufacturing from those countries to the United States.

Canada and Mexico can both be expected to push back hard to protect jobs in their countries but may be forced to make difficult tradeoffs to avoid broader tariff pain.