Center Stage: US duties will collapse trade with Canada, PRC and Mexico by 30-50%
The customs duties imposed by Donald Trump, which are to take effect on February 4, will lead to a halving of US trade with Canada and Mexico, and with China - by at least a third, according to experts interviewed by Izvestia. The European Union is probably next in line - the new American president has already threatened Europe with similar restrictions. At the same time, the states themselves will suffer the most from the new tariffs: inflation will rise there because of the duties. Russia may even benefit from a new round of trade war - the global rise in fuel prices is beneficial for its budget. And China will have to supply our market with even more products at more reasonable prices. What signals the new U.S. duties give - in the material of "Izvestia".
U.S. Customs Tariffs against Canada, China and Mexico
From February 4, the import tariffs that the new US President Donald Trump imposed on Ottawa, Beijing and Mexico City should begin to take effect. Thus, additional 25% duties were imposed on goods from Canada and Mexico, except for energy resources supplied by the former (they are assigned a tariff of 10%).
The US neighbors have already reacted to Trump's innovations. Canadian Prime Minister Justin Trudeau said that the country will impose retaliatory duties of 25% on American goods, and may also apply non-tariff restrictions on the supply of energy resources and critical materials. Mexican President Claudia Sheinbaum spoke with Trump on the phone, after which she announced the suspension for one month of the duties imposed by Washington in the amount of 25% on Mexican goods - she wrote about it in the social network X (former Twitter, blocked in Russia).
In addition, goods from China fell under the 10% taxation. The country's Ministry of Trade, in turn, promised to file a lawsuit with the WTO and take countermeasures.
However, the trade wars between China and the United States began during Trump's first term in 2018 - they implied the introduction of mutual duties on goods. Back in 2023, the Republican promised to cancel the most-favored-nation trade regime for China in case of his return to the White House. Without it, Washington will be able to impose any tariffs on imports.
Much lower rates have been imposed on China than originally planned (earlier Trump called the figure 60%), emphasized Dmitry Novikov, head of the Laboratory of Political Geography and Contemporary Geopolitics at the National Research University Higher School of Economics. This shows that the economic nexus between Washington and Beijing is much more critical for the American economy than the US presents it in the public field, and a significant increase in tariffs would be a blow to the states themselves.
Losses to the world economy from a trade war
Right now, the States' reciprocal trade with these countries is roughly $600 billion and $800 billion respectively. According to the World Bank, Canada and Mexico have a significant dependence on the States for their exports - they account for almost 80% of these countries' supplies abroad. According to the experts interviewed by Izvestia, as a result of the new duties, the US trade turnover with Canada and Mexico may more than halve in 2025. Such a decline is possible if the countries do not make any compromises with the United States and do not fulfill certain conditions, for example, on controlling the migration flow, said independent expert Andrei Barkhota.
Trade with China will decrease by at least a third because of the new duties, experts say. Last year it totaled $700 billion.
In addition, the trade war between the states can lead to the fact that the global economy will go into recession - the world GDP may decline by 3-4%, added Galina Ryazanova, associate professor at the State University of Management. By comparison, the global economy added 2.7% in 2024.
US duties against the European Union
In addition, Donald Trump said that America will "definitely" impose tariffs on EU countries. Before that, he announced to set duties of 10% against trading partners from Europe. After that, European companies began to build up stocks in American warehouses before the inauguration of the new leader, wrote Handelsblatt.
- The European economy is now in its most vulnerable position. Most likely, the U.S. will continue to threaten to impose duties and, under this pretext, will insist that the EU reduce its dependence on China as a supplier and sales market," said Andrei Chelyuskin, associate professor at the Institute of Social Sciences of the Presidential Academy.
U.S. President Donald Trump
According to him, there are now too many disagreements within the association, while at the same time European manufacturers will continue to seek more comfortable conditions for their business both in the States and in Asia. However, this will further weaken Europe's manufacturing potential, and the achievement of even very modest growth rates will be in question, added Andrei Chelyuskin.
Why Trump imposes import duties
There are several reasons for the introduction of duties, they are mainly in the political and economic plane. First, the new US leader wants to get countries to cooperate on security and stop the flow of illegal migrants and drugs into the US, according to Natalia Milchakova, a leading analyst at Freedom Finance Global.
- Secondly, Trump wants to try to use duties on imported goods to finance the huge US budget deficit, which in 2024 exceeded $1.8 trillion and became the third largest budget deficit in the history of the United States," the expert added.
Finally, the U.S. administration intends to support domestic producers and limit competition for them from cheaper imports, said Natalia Milchakova.
- However, in order to bear fruit, the tariff policy should be targeted and selective - it is analogous to a surgical tool, not a sledgehammer. But a blanket increase in import duties for all goods, including those that are important to American industry, can do more harm than good. And this is exactly the approach we are now seeing in the U.S.," said Olga Belenkaya, Head of Macroeconomic Analysis at Finam.
The exception in the form of energy resources from Canada, which are subject to a 10% duty instead of 25%, was made precisely to limit the growth of prices for gasoline and utilities in the U.S., she said. But it may not be enough to control prices in the country. In general, however, the duties are introduced on a large scale. This means that they will only accelerate inflation in the United States.
Ekaterina Novikova, associate professor of economic theory at Plekhanov Russian Economic University, agrees that the US itself will suffer the most from the tariffs - prices in the domestic market and unemployment will rise.
What will Russia get from the US trade war with China, Canada and Mexico?
The new U.S. duties against China, Canada and Mexico, as well as the promise to impose them against the European Union, show that the U.S. is coming into conflict with most of the world's major countries, not just Russia, against which new sanctions have been imposed for the past three years. The main political outcome of the trade war is a possible weakening of unity among Western countries, especially if the opposition drags on and spreads to European goods, said Dmitry Volodin, a leading researcher at the Institute of the United States and Canada of the Russian Academy of Sciences.
Russia will not be negatively affected by the new restrictions. Our country has already transferred most of its settlements in national currencies, Izvestia wrote earlier. This indicates that the domestic economy is gradually becoming more independent and confident.
According to Dmitry Volodin, the Russian economy may be affected only by the duties directed against Beijing, as China is Russia's main partner. Since 2022, Russia has had virtually no trade with Canada, and the level of trade turnover with Mexico is at a low level, the expert said.
On the contrary, China is the largest producer of many types of products - from steel to light industry, recalled Andrei Chelyuskin. With the closure of traditional markets and stagnation of domestic demand in China, more and more goods will flow to Russia and create competition for national producers.
On the other hand, if China's production slows down, the demand for petroleum products from Russia will also decrease, which may have a negative impact on our exports and budget revenues.
However, in the medium term, the duties may lead to Canada reducing its oil exports to world markets, summarized Natalia Milchakova of Freedom Finance Global. This will be a factor in the growth of fuel prices, which is a favorable signal for the Russian budget.
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