Trump ready for trade showdown

Business & Economy

The Big Story

Trump takes aim at Mexico, Canada with major shift

President Trump is on the cusp of upending North American trade, threatening to strike a radical blow to relationships with America’s top economic partners.

Trump is expected to announce Saturday steep new tariffs on goods from Canada and Mexico, after pledging for months to impose import taxes on two close U.S. allies.

The president has left several questions about his plans unanswered, such as how high the tariffs might be, when they would be implemented, under which law they would be issued and which goods might be exempted.

Trump’s most aggressive proposal, however, would hit all Canadian and Mexican products with 25 percent import taxes. Experts say doing so would spur near-immediate increases in food and fuel prices, while prompting damaging retaliation from two countries deeply integrated into the U.S. economy.

“That would be a massive deal. These are America's two largest trading partners. We depend on imports from both of those countries, and your first-order impact is higher prices for American consumers and for companies,” said Edward Fishman, a senior research scholar and adjunct professor at Columbia University.

“And I think that's why you see a lot of people, including folks who supported President Trump, voice a lot of concerns,” added Fishman, author of the forthcoming book “Chokepoints: American Power in the Age of Economic Warfare.”

During his first term, Trump led a renegotiation of NAFTA that earned praise from Democrats and union advocates for boosting U.S. products through various labor and environmental stipulations.

But Trump has expanded the aims of his tariffs — and his ire with Canada and Mexico — during his second term. The president has alleged that Canada and Mexico are refusing to take necessary steps to stop the flow of migrants and lethal drugs such as fentanyl into the U.S.

The Hill's Sylvan Lane has more here.

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Essential Reads

Key business and economic news with implications this week and beyond:

Trump set to announce steep tariffs on Mexico, Canada

President Trump is on the cusp of upending North American trade, threatening to strike a radical blow to relationships with America’s top economic partners.

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Tax Watch

Welcome to Tax Watch, a new feature in The Hill's Business & Economy newsletter focused on the fight over tax reform and the push to extend the 2017 Trump tax cuts this year.

GOP agenda could come with steep cost

The Republican reconciliation agenda could cost as much as $7 trillion over the next 10 years before offsets, according to an analysis released Friday by the Bipartisan Policy Center. For comparison, the government collects about $4.5 trillion and spends about $6.2 trillion a year.

Extending the individual provisions of the 2017 Tax Cuts and Jobs Act would add $3.4 trillion to the deficit over the next decade, canceling Social Security taxes would add $1.2 trillion and extending the business breaks would add $750 billion, the analysis found.

Republicans are looking at budget cuts to pay for some of this. The conservative Republican Study Committee said this week that “reconciliation legislation must reduce the federal budget deficit.”

In addition to cuts to Social Security and Medicare cuts and nixing the employee retention tax credit, Republicans have been considering getting rid of the mortgage interest deduction, which could bring in $1 trillion in revenues.

Economists say getting rid of the deduction would be a “big deal” since it’s been an issue in the party for decades.

“It’s been a very big deal for decades. The reason is pretty simple: the majority of American households own their houses and pay mortgage interest,” Princeton University economist and former vice Chair of the Federal Reserve Alan Blinder told The Hill.

— Tobias Burns

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