If you were setting out to design a trade policy that would harm the American economy while undermining political support for its leadership, you might come up with something like the tariffs that Donald Trump just imposed on Canada, China, and Mexico.

The new tariffs will raise prices for American consumers, weaken the American auto industry, and prompt severe retaliation from America’s top trading partners. With respect to China, a case can be made that tariffs would promote U.S. national security and domestic industry if they were targeted and well designed. But Trump’s blanket 20 percent tariff on all Chinese imports is neither. Meanwhile, the 25 percent tariffs on Canada and Mexico are utterly incomprehensible. There is no grand economic vision, geopolitical strategy, or even political logic behind them. International trade, like all areas of public policy, is a game of weighing costs versus benefits. Trump’s tariffs are the rare policy that might turn out to represent nothing but cost.

The most widespread and direct effect of the new tariffs will come in the form of inflation. Tariffs, which are literally a tax on imported goods, are often passed on to consumers in the form of higher prices, and Mexico, Canada, and China together account for more than 40 percent of U.S. imports. Yale’s Budget Lab estimates that the new tariffs will cost the average household anywhere from $1,600 to $2,000 a year.

[William J. Bernstein: No one wins a trade war]

Those higher costs will disproportionately affect the specific items that American consumers pay the most attention to. Survey after survey has shown that discontent with the broader economy in recent years has been driven more by high grocery prices than any other category of spending. Mexico is the largest exporter to the U.S. of fruits, vegetables, alcoholic beverages, and sugar, and Canada is the top exporter of meat, grains, baked goods, and cooking oils.

In theory, American farms could ramp up production to offset some of those higher prices. But that process could take months or years, and will be made all the more difficult by Trump’s deportation agenda—nearly half of the agricultural workforce is composed of undocumented immigrants—as well as the tariffs themselves, which will raise the costs of foreign fertilizer and farming equipment, on which domestic producers rely heavily.

The primary economic case for tariffs is that they shift demand toward domestically produced goods, which, in theory, should boost American industry. “I would just say this to people in Canada or Mexico: If they’re going to build car plants, the people that are doing them are much better off building here,” Trump told reporters at the White House when he announced the new tariffs yesterday afternoon.

That may come as a shock to, well, the American auto industry. The Big Three car companies have practically begged Trump not to go through with the tariffs. Canada and Mexico produce more than half of the individual car parts that American automakers import every year to assemble their vehicles in the U.S., including multiple components for which there exist literally no American suppliers. A recent report found that the new tariffs could raise the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. American automakers “should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American work force,” Matt Blunt, the president of the American Automotive Policy Council, which represents the Big Three automakers, said in a statement yesterday. And automakers aren’t alone here. A broad survey of U.S. manufacturers found that the industry was already experiencing higher costs and lower employment in anticipation of the new tariffs.

The full economic cost of the tariffs will hinge on how Mexico, Canada, and China respond. Last month, Beijing placed 10 to 15 percent tariffs on American energy and car exports; today it added chicken, wheat, corn, soybeans, dairy, and other food products to the list. Canada has also announced that it will apply 25 percent tariffs on $30 billion worth of American goods and extend them to $125 billion worth of goods in three weeks. (Mexico has yet to respond with measures of its own but has said it will do so soon.) These retaliatory measures will make it harder for American producers—the ostensible beneficiaries of tariffs—to sell their products abroad.

The official justification for the tariffs is to force Canada and Mexico to address the supposed “extraordinary threat” posed by illegal immigration and fentanyl trafficking at America’s borders. This is a transparent pretext to allow Trump to declare a “national emergency” that empowers him to impose tariffs immediately and unilaterally. Last year, the Canadian border was responsible for just 0.2 percent of the fentanyl seized by U.S. border authorities and 1.5 percent of illegal border crossings. Meanwhile, illegal immigration at the southern border has plummeted since early 2024 to near-record lows, leading Trump himself to declare, “The Invasion of our Country is OVER.” The amount of fentanyl seized at the southern border fell by about 20 percent last year, and Mexican President Claudia Sheinbaum has presided over a major anti-cartel crackdown since taking office in October.

[Rogé Karma: Reaganomics is on its last legs]

Usually, when elected officials implement foolish policies, they do so because they believe the political upside outweighs the substantive downside. What makes Trump’s tariffs so unusual is that the politics of them also appear to be terrible. Trump promised to impose major tariffs during the campaign, and so he might feel that failing to follow through would undermine his credibility. But voters consistently cited inflation, not trade, as the single-most important issue in the 2024 election, and Trump also made promises to lower prices. Now he seems to be going out of his way to break them.

A month ago, when Trump decided to postpone the Mexico and Canada tariffs just before they were set to take effect, I argued that they were never anything more than a hollow threat. I now know I was wrong—but I still don’t understand why a president would follow through on a policy likely to generate so much political backlash for so little gain.

The question now is how long the new restrictions will last. Perhaps a swift political backlash in response to rising prices will compel Trump to find a new pretext to declare victory and get rid of the tariffs promptly. Or perhaps the president will not only keep the tariffs in place, but open up new frontiers in his trade war. Trump has already announced plans to levy reciprocal tariffs on all countries that currently impose any kind of trade barriers on the U.S.—a policy that the Budget Lab estimates would cost American consumers up to $3,400 a year—as soon as April 2. Until yesterday, I would have said there’s no way that would happen. Now I’m not so sure.

The Nasdaq and other stock market indexes began Monday morning by dropping sharply in the face of President Donald Trump’s new tariffs, which are poised to kick in Tuesday. The market decline reversed somewhat in the afternoon after Mexican President Claudia Sheinbaum announced a pause on Trump’s new import tariffs.

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Some presidents spend their first few weeks in office trying to make good on their central campaign promise; Donald Trump has instead done everything he can to avoid having to follow through on his. A controversial campaign pledge to enact big, universal tariffs that would transform the global-trade system and usher in American prosperity has been whittled down to a set of hollow threats designed to extract mostly symbolic concessions from America’s neighbors. Trump is behaving like a man who has lost the appetite for aggressive tariffs—if he ever had it in the first place.

Throughout the 2024 campaign, Trump vowed to enact the most sweeping trade restrictions since the Great Depression: a 10 to 20 percent tariff on all goods coming from foreign countries, plus a special 60 percent tariff on goods from China. Trump and his key trade advisers argued that the plan would revive American manufacturing, enrich the U.S. government, and keep America’s economy ahead of China’s.

Following Trump’s victory in November, however, some of his economic advisers began offering a pared-down proposal in an effort to assuage business leaders and investors who worried about tariffs’ inflationary consequences. Tariffs, they argued, were really a negotiating tool that would allow Trump to win economic and geopolitical concessions from America’s trading partners. Howard Lutnick, who is now Trump’s secretary of commerce, claimed that the mere threat of tariffs could be used as leverage to rewrite the rules of the international trading system in America’s favor. “We’ll make a bunch of money on the tariffs, but mostly everybody else is going to negotiate with us,” he said on CNBC. Scott Bessent, now Trump’s treasury secretary, argued that tariffs could have noneconomic benefits as well; they would, he said, be “a useful tool for achieving the president’s foreign-policy objectives.”

[Rogé Karma: Reaganomics is on its last legs]

Upon taking office, Trump narrowed the logic of his proposed trade restrictions even further. The economic rationale disappeared entirely, and even the political goals tied to his tariff threats appeared oddly small-bore. In the first two weeks of his presidency, Trump threatened tariffs against Colombia for refusing to take in flights carrying deported migrants, against the EU for running trade surpluses with the U.S., and against Brazil, Russia, India, China, and South Africa (collectively referred to as the “BRICS”) for considering the creation of a new reserve currency. Then, this past Friday, Trump announced his first official round of tariffs: a 10 percent levy on all goods from China and 25 percent on nearly all goods from Mexico and Canada. According to a document announcing the tariffs, their purpose would be to “hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.” “WILL THERE BE SOME PAIN?” Trump posted on Sunday on Truth Social. “YES, MAYBE (AND MAYBE NOT!).”

Then, almost as fast as Trump announced the tariffs, he reversed course. Yesterday morning, he decided to pause the tariffs on Mexico after its president, Claudia Sheinbaum, announced that she would deploy 10,000 troops to the border to curb immigration and drug trafficking. Later that afternoon, the tariffs on Canada were also paused following two phone calls between Trump and Canadian Prime Minister Justin Trudeau, who agreed to implement a $1.3 billion plan to reinforce America’s northern border, appoint a “Fentanyl Czar,” and launch a $200 million “intelligence directive” to crack down on organized crime and fentanyl. Trump took the opportunity to declare victory. “I am very pleased with this initial outcome,” he wrote in a post on Truth Social. “FAIRNESS FOR ALL!”

In reality, Trump’s tariff threats accomplished next to nothing beyond political theater. Canada’s $1.3 billion border plan sounds like a big concession—but it had already been announced before Trump took office. Moreover, last year, just 1.5 percent of illegal border crossings took place and just 0.2 percent of the fentanyl seized by U.S. border authorities was found at the Canadian border. Crossings at the southern border, meanwhile, have been plummeting since March and, by the end of last year, had reached a lower point than when Trump left office the first time. Fentanyl entering into the U.S. from Mexico remains a problem, but sending more Mexican troops to the border is unlikely to fix it; Mexico already sent 15,000 troops to the border in response to Trump’s tariff threats in 2019, and the scale of trafficking has only increased.

Maybe political theater was the point all along. The appeal of tariffs has as much to do with the signal they send as with their concrete benefits. In fact, a widely discussed economics paper published last year found that although Trump’s 2018–19 trade war with China failed to boost employment in areas that had been most undercut by Chinese exports, it still boosted vote share for Trump and other Republicans in those places. Trump seems to have intuited this dynamic on his own. By proposing a set of tariffs that he likely had no intention of following through on, Trump could appear tough on trade, declare a victory, and claim to have fulfilled a key campaign promise—all without having to risk political backlash over the higher prices that come with  actual high tariffs. Of course, whether voters will view Trump’s actions in this way, rather than as a transparent charade, remains to be seen.

[Read: A handbook for dealing with Trump threats]

What is clear is that the averted tariffs had essentially nothing to do with economics. For years, Trump’s intellectual supporters, notably his former trade representative Robert Lighthizer and his current senior trade adviser, Peter Navarro, have promoted a heterodox economic theory in support of major tariffs. Enacting such restrictions, they argue, would turn America into a manufacturing powerhouse, ensure its lead in the crucial technologies of the future, and deliver prosperity to Middle America. Perhaps the most striking thing about the tariffs that Trump has threatened to impose so far is that they don’t even pretend to further that vision. Trump voters were promised a manufacturing revival, and what they got was a Canadian fentanyl czar.

The partial exception is the 10 percent tariff on China that went into effect this morning and, as of this writing, remains intact. There, the economic and geopolitical case for restrictions is far more coherent: Liberalized trade relations with China has been empirically linked to the decline of America’s manufacturing base, and depending on a great-power rival for crucial technologies poses national-security risks. Yet, even here, Trump has not justified the tariff in those terms—and he implemented it at a level far below the 60 percent that he promised on the campaign trail.

Trump’s second term is still in its infancy. Perhaps trade restrictions on the scale promised on the campaign trail remain in the offing. The available evidence, however, suggests that Trump favors steep tariffs only so long as they are theoretical. Most experts have argued that Trump’s tariff plan would inflict severe economic pain domestically. The president’s most recent moves suggest that he has come to believe them.

Mexican President Claudia Sheinbaum explained what happened in her call with Trump that paused tariffs.

Mexico President Claudia Sheinbaum has announced a pause to President Donald Trump’s new tariffs on imports after a meeting between the two world leaders.

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For a moment on Sunday, the government of Colombia’s Gustavo Petro looked like it might be the first in Latin America to take a meaningful stand against President Donald Trump’s mass-deportation plans. Instead, Petro gave Trump the perfect opportunity to show how far he would go to enforce compliance. Latin American leaders came out worse off.

On Sunday afternoon, Petro, a leftist who has held office since 2022, announced on X that he would not allow two U.S. military aircraft carrying Colombian deportees to land. He forced them to turn back mid-flight and demanded that Trump establish a protocol for treating deportees with dignity.

Colombia had quietly accepted military deportation flights before Trump’s inauguration, according to the Financial Times. But the Trump administration began flaunting these flights publicly, and some deportees sent to Brazil claimed that they were shackled, denied water, and beaten. Petro saw all of this as a step too far, and reacted. He clarified that he would still accept deportations carried out via “civilian aircraft,” without treating migrants “like criminals” (more than 120 such flights landed in Colombia last year).

Trump responded by threatening to impose 25 percent tariffs on all Colombian goods (to be raised to 50 percent within a week), impose emergency banking sanctions, and bar entry to all Colombian-government officials and even their “allies.” The message was clear: To get his way on deportations, he would stop at nothing, even if this meant blowing up relations with one of the United States’ closest Latin American partners.

[Quico Toro: Trump’s Colombia spat is a gift to China]

Petro almost immediately backed down. He seemed to have taken the stand on a whim, possibly in part to distract from a flare-up in violence among armed criminal groups inside his country. The White House announced that Colombia had agreed to accept deportation flights, including on military aircraft. Petro gave a tepid repost, then deleted it.

For Trump, the incident was a perfect PR stunt, allowing him to showcase the maximum-pressure strategy he might use against any Latin American government that openly challenges his mass-deportation plans and offering a test case for whether tariffs can work to coerce cooperation from U.S. allies. For Latin America, the ordeal could not have come at a worse time.

Across the region, leaders are bracing for the impact of deportations—not only of their own citizens, but of “third-country nationals” such as Venezuelans, Nicaraguans, and Cubans, whose governments often refuse to take them back. They are rightfully worried about what a sudden influx of newcomers and a decline in remittance payments from the United States will mean for their generally slow-growing economies, weak formal labor markets, and strained social services, not to mention public safety, given the tendency of criminal gangs to kidnap and forcibly recruit vulnerable recent deportees.

If Latin American governments are trying to negotiate the scope or scale of deportation behind closed doors, they do not appear to be having much success. Several leaders seem to be losing their nerve. Mexico’s president, Claudia Sheinbaum, went from expressing hope for an agreement with the Trump administration to receive only Mexicans to accepting the continued deportation of noncitizens—perhaps because Trump threatened to place 25 percent tariffs on all Mexican goods as soon as February 1. Honduras threatened to expel a U.S. Air Force base on January 3 if the United States carried on with its deportation plans. By January 27, Honduras folded, saying that it would accept military deportation flights but requesting that deportees not be shackled. Guatemala is trying to draw the line at taking in only fellow Central Americans.

Most Latin American leaders will bend to Trump’s wishes on mass deportation rather than invite the strong-arm tactics he threatened to use on Colombia. One reason is that tariffs can really hurt the countries whose cooperation Trump needs most on deportations. Unlike most of South America, Mexico, Colombia, Guatemala, Honduras, and El Salvador still trade more with the United States than with China. Only with Mexico, the United States’ largest trade partner, does the leverage go both ways, but even there it is sharply asymmetrical (more than 80 percent of Mexican exports go to the U.S., accounting for nearly a fifth of the country’s GDP).

Latin American countries could improve their bargaining position by taking a unified stand and negotiating with Trump as a bloc. But the chances that they will do so are slim and getting slimmer. Today, Honduran President Xiomara Castro called off a planned meeting of the Community of Latin American and Caribbean States, a left-leaning regional bloc, to discuss migration, faulting a “lack of consensus.”

[Juliette Kayyem: The border got quieter, so Trump had to act]

Latin American presidents have relatively weak incentives to fight Trump on migration. The region is home to more than 20 million displaced people, millions of whom reside as migrants or refugees in Mexico, Colombia, Peru, and elsewhere—and yet, migration is simply not that big of a diplomatic political issue in most countries. That could change if deportations reach a scale sufficient to rattle economies, but Latin American leaders are focused on the short term, much as Trump is. Presidential approval ratings tend to rise and fall based on crime and the economy more than immigration, and at least for now, anti-U.S. nationalism is not the political force it has been in the past.

So Trump will likely get his way in more cases than not. But he shouldn’t celebrate just yet, because the short-term payoff of strong-arming Latin America will come at the long-term cost of accelerating the region’s shift toward China and increasing its instability. The latter tends, sooner or later, to boomerang back into the United States.

“Every South American leader, even pro-American ones, will look at Trump’s strategy vis-à-vis Panama, Colombia, and Mexico and understand the risks of being overly dependent on the U.S. right now. The majority will seek to diversify their partnerships to limit their exposure to Trump,” Oliver Stuenkel, a Brazilian international-relations analyst, posted on X in the middle of the Colombia standoff. He’s right. Latin American leaders, even several conservative ones, moved closer to China during Trump’s first term, which is not what Trump wants. Reducing China’s presence in Latin America seems to be his No. 2 priority in the region (see his threats to Panama over the Hong Kong company operating near its canal). Chinese investments in dual-use infrastructure and 5G technology pose long-term national-security risks to the United States. But Trump’s tariff threats and coercion could rattle Latin America and help China make its sales pitch to the region: We’re the reliable ones. The long-standing lament that Latin American conservatives, centrists, and leftists share is that whereas the United States comes to the region to punish and lecture, China comes to trade. Trump’s current approach gives that complaint extra credence.

[From the September 2024 issue: Seventy miles in hell]

Trump’s deportation plans threaten to destabilize parts of Latin America, which will have repercussions for the United States. The arrival of hundreds of thousands of people to countries without the economic or logistical capacity to absorb them could leave the region reeling. Consider that the Trump administration is negotiating an asylum agreement with El Salvador—a country with one of the weakest and smallest economies, and highest rates of labor informality, in all of Central America. If Venezuelans, Nicaraguans, and Cubans are sent there, they are almost guaranteed not to find jobs. People deported to Honduras and Guatemala will also likely struggle to find work and face recruitment by gangs. And because remittances make up about a fifth of GDP in Guatemala and about a quarter in El Salvador, Honduras, and Nicaragua, large-scale deportations threaten to deliver a brutal shock to their economies. Mexico’s economy is bigger and sturdier, but economists have shown that large influxes of deportees there, too, tend to depress formal-sector wages and increase crime. The inflow of workers might still benefit economies like Mexico’s in the long run. But in the short to medium term, Trump’s mass-deportation plans are a recipe for instability.

The lesson of the past several decades—Trump’s first term included—is that Latin American instability never remains contained within the region. It inevitably comes boomeranging back to the United States. Mexican cartels didn’t gain far-reaching influence just in their country. They fueled a fentanyl epidemic that has killed more than a quarter million Americans since 2018. Venezuela’s economic collapse under authoritarian rule didn’t bring misery only upon that country; it produced one of the world’s biggest refugee crises, with more than half a million Venezuelans fleeing to the United States. Instability nowhere else in the world affects the United States more directly, or profoundly, than that in Latin America.

In the 1980s and ’90s, internal armed conflicts raged in Colombia and Central America, and Mexico confronted serial economic crises. Since then, the United States’ immediate neighbors have become relatively more stable, democratic, and prosperous. But slow growth, fiscal imbalances, and, above all, the growing power of organized crime have tested that stability in recent years. Trump is adding to the pressure with mass deportations—then hoping to contain whatever erupts by simply hardening the southern border. That’s quite the gamble.

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In a news conference today, President-Elect Donald Trump previewed his second-term approach to foreign policy. One theme was force: He didn’t rule out using the military to seize the Panama Canal or to acquire Greenland, and floated the idea of employing “economic force” to compel Canada to operate as an American state. Some of his ideas seem largely symbolic; at one point, he suggested renaming the Gulf of Mexico to the Gulf of America. But these statements also fall into what my colleague David Frum has called a zero-sum attitude toward the rest of the world. Either a foreign country is with Donald Trump—and ready to collaborate with American interests—or it is against him.

Trump’s transactional outlook has put foreign leaders in a difficult position—including Canadian Prime Minister Justin Trudeau, who announced his resignation yesterday. Trump has threatened in recent months to impose 25 percent tariffs on Canada, and he’s relished taunting the nation, repeatedly making comments about Canada joining the United States, including calling the prime minister “Governor Trudeau.” Almost immediately after Trudeau announced his decision yesterday, Trump wrote on Truth Social that the Canadian prime minister was stepping down because “many people in Canada LOVE being the 51st State,” and suggested that Trudeau had resigned in direct response to the threat of tariffs.

Trump is tying himself more to Trudeau’s resignation than he should. The prime minister’s downfall was rooted in factors that have bedeviled him for years: Canada has suffered from high inflation and cost of living, and Trudeau has also faced backlash over immigration. And though the first few years of Trudeau’s term came with progressive policy wins (and international celebrity), it also produced a series of ethical and personal scandals. His approval ratings have tanked in recent months.

Trudeau’s attempts to stay on good terms with Trump, including by visiting him at Mar-a-Lago, seemed to contribute to the perception among some on his staff that he was not equipped to handle a second Trump term. In a pointed resignation letter, Deputy Prime Minister Chrystia Freeland said that she was “at odds” with her boss over the best way forward, arguing that Canada needed to take Trump’s threats more seriously and not resort to “political gimmicks.” Freeland’s resignation, which came as a surprise, only hastened the prime minister’s downward trajectory; by this month, many of his allies were pushing him to step down. He will remain in office until a new party leader is selected later this year.

In Trump’s first term, Trudeau managed to frame himself as a progressive foil to Trump. The leaders had some open differences, and Trump did impose some tariffs at the time, a narrower set than what he is threatening now. But Trump’s policy agenda, especially at the start of his term, was less about antagonizing allies than it was about domestic and culture-war issues (and shortly after he started focusing on tariffs, the coronavirus pandemic derailed everything else). But the approach Trump seems to be taking in his next term posed a new challenge for Trudeau. If Trudeau’s “domestic political position had been just a little bit stronger,” David wrote to me in an email, “he might have tried to gamble on a confrontational policy—bad for the Canadian economy, yes, but good for his own survival.” President Claudia Sheinbaum of Mexico seems to be navigating a similar dilemma; she first threatened counter-tariffs in response to Trump’s warnings, then appeared to walk this back, stating that there was no possibility of a tariff war with America.

Trump is pleased with Trudeau’s demise right now. But in reality, the president-elect is making it harder for the U.S. to work productively with Canada in the future. Cooperating closely with the Trump administration may now become a political liability in Canada, David predicted, and Trudeau’s Liberal Party will seek to embarrass any future Conservative government that gets too close to Trump. Ultimately, David warned, Trump is playing a “dangerous game.”

Related:

America’s lonely future The political logic of Trump’s international threats

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The new Rasputins Trump is facing a catastrophic defeat in Ukraine. Judge Cannon comes to Trump’s aid, again. The coming assault on birthright citizenship

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A New York appeals court denied Donald Trump’s request to delay the sentencing hearing in his criminal hush-money case. Florida District Judge Aileen Cannon blocked the Justice Department from releasing Special Counsel Jack Smith’s final report on his investigations into Trump’s classified-documents case and election-interference case. The House passed a bill that would require ICE to detain undocumented immigrants charged with nonviolent and minor-level crimes.

Dispatches

Work in Progress: Republicans have promised to deliver “crypto-friendly regulations” that will supposedly “bring an unheralded era of American prosperity,” writes Annie Lowrey. But the clock is ticking on a crypto crash. The Weekly Planet: Climate models can’t explain what’s happening to Earth, Zoë Schlanger writes.

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Evening Read

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The Agony of Texting With Men

By Matthew Schnipper

My friend’s boyfriend, Joe Mullen, is a warm and sweet guy, a considerate person who loves dogs and babies. When I see him in person, once every month or two, he makes a point to ask me what I’ve been up to, how my life is going. Joe is a big music fan, and we share a love of music made by weird British people. I once got excited for him to check out an artist I thought he’d like. So I asked him for his number, and later I sent him a Spotify link to an album. “Hi :) It’s Schnipper,” I wrote. “I think u would dig this guy’s stuff.” I figured this might be the first step into a portal of greater closeness, a relationship of our own. Man to man. Except it wasn’t, because Joe did not text me back.

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