The Daily
North America Averted a Trade War — for Now
Feb 4, 2025
Ana Swanson, trade reporter, Matina Stevis-Gridneff, Canada bureau chief, and Simon Romero, international correspondent, dive into the brinkmanship that nearly sparked a trade war between North America. They discuss last-minute negotiations and the economic fallout looming over Canada and Mexico. The trio unpacks how tariffs could wield political power and examine Prime Minister Trudeau's potential retaliatory measures. They also explore the broader implications of U.S.-Mexico relations and the emotional stakes of shifting alliances in trade dynamics.
31:02
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Quick takeaways
- The proposed tariffs by President Trump posed an existential threat to the economies of Mexico and Canada, risking significant job losses and potential recessions for both countries.
- The last-minute negotiations that averted the crisis highlighted how tariffs were used as political leverage rather than purely economic instruments in U.S.-Canada-Mexico relations.
Deep dives
Potential Economic Fallout of Proposed Tariffs
The proposed tariffs by President Trump on Canada and Mexico could have catastrophic effects on their economies. A 25% tariff on Canadian goods could lead to significant job losses, with estimates suggesting up to half a million jobs in Ontario's automotive sector alone could be at risk. Similarly, Mexico, which depends heavily on trade with the U.S., could experience a recession with predictions indicating a potential two percentage point decline in GDP. These tariffs would not only affect these neighboring countries but would also have adverse ramifications for U.S. consumers, who may face increased prices for a wide range of imported goods.
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