What do tariffs of 25% mean? 

They mean that everything that’s imported from Canada and Mexico is going to rise in price, many things by a lot more than 25%. What’s imported from there? Food, vegetables, fruit, lumber, all kinds of basics. Why will it rise, in some cases more than the tariff rate? Because of course distributors and the entire value chain needs to make money in order to operate.

So we are going to see a ruinous wave of inflation. When I say ruinous, I mean it. 25%? That’s an enormous rate for a tariff. Normally, if want to discourage trade or investment, we’d set that rate at maybe 5 or 10%. Not only do these guys have no idea what they’re doing, they have no idea what kind of ruin they’re about to unleash.

In short order, Americans are going to be catastrophically more for nearly everything on the shelves. They already can’t afford it, which we know because of course credit balances are skyrocketing and living standards are falling.

But that’s only sort of the small story. This isn’t just “about tariffs,” but an approach to the economy which also appears to include attempting to lay off the entire government.

I called it Chaosterity the other day. Tariffs hurt people, and the people they hurt the most are those who have the least. In this regard, while attempting to lay off the entire government is austerity, deciding you’re going to have 25% less stuff (which is another way to think about 25% tariffs, at an equivalent price level), is going to result in chaos, a kind which most living Americans have never really seen. We’re talking 1930s level consequences.

Because what all this does next is…what blunders like this do next…they accumulate and begin cascades, vicious spirals.

…

America is now entering the implosive phase. If these plans come to fruition, we are going to see all of the same vicious cycles happen, only much faster. Inflation, frozen markets, bankruptcies, unemployment, plummeting incomes, falling living standards.

This is a recipe for a depression. 

Prepare for Implosion, or, This is America’s Brexit Moment by Umair Haque, The Issue, Jan 31, 2025

Canada and Mexico Move to Retaliate on Trump Tariff Orders

Where Things Stand

• Trump tariffs: President Trump on Saturday followed through with his threat to impose stiff tariffs on Mexico, Canada and China, setting the stage for a destabilizing trade war with the United States’ largest commercial partners. The tariffs were set to begin on Tuesday. Read more ›
• Tariff retaliation: Mexico and Canada immediately vowed to impose tariffs of their own. The Canadian prime minister, Justin Trudeau, announced retaliatory tariffs starting with 25 percent tariffs on approximately $20 billion worth of U.S. goods on Tuesday, with $85 billion more to follow within three weeks.
• China’s response: Its commerce ministry said China would file a case against the United States at the World Trade Organization and also vowed unspecified “corresponding countermeasures to firmly safeguard its rights and interests.” And its foreign ministry defended its record on fentanyl, saying that China had led the world in 2019 when it imposed stringent regulations on fentanyl-related substances.

Here’s what else to know:

• Major partners: Products from Mexico, China and Canada accounted for more than 40 percent of all goods that come into the United States. The three countries provide cars, medicine, shoes, timber, electronics, steel and many other products to American consumers. Mr. Trump and other White House officials have deflected criticism that the tariffs will add to inflation.
• Canada’s plans: Before Mr. Trudeau’s prime-time address, Canada had indicated that it would tax Florida orange juice, Tennessee whiskey and Kentucky peanut butter — products from states with Republican senators. Mr. Trudeau said on Saturday night that Canada’s tariff list would also include products like beer, wine, vegetables, perfume, clothing, shoes, household appliances, furniture and sports equipment, and materials like lumber and plastics.
• Oil and gas impacts: The 10 percent tariffs that Mr. Trump said the United States would impose on oil imported from Canada are not as steep as he had indicated they would be. But they could cause prices at the pump to rise modestly in the U.S., particularly in the Midwest, where refineries turn a lot of Canadian oil into gasoline and diesel.

Canada and Mexico Move to Retaliate on Trump Tariff Orders, The New York Times, Feb 1, 2025

ADDRESSING AN EMERGENCY SITUATION: The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA).

• Until the crisis is alleviated, President Donald J. Trump is implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China.  Energy resources from Canada will have a lower 10% tariff.
• President Trump is taking bold action 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.
• The orders make clear that the flow of contraband drugs like fentanyl to the United States, through illicit distribution networks, has created a national emergency, including a public health crisis. Chinese officials have failed to take the actions necessary to stem the flow of precursor chemicals to known criminal cartels and shut down money laundering by transnational criminal organizations.
  • In addition, the Mexican drug trafficking organizations have an intolerable alliance with the government of Mexico. The government of Mexico has afforded safe havens for the cartels to engage in the manufacturing and transportation of dangerous narcotics, which collectively have led to the overdose deaths of hundreds of thousands of American victims. This alliance endangers the national security of the United States, and we must eradicate the influence of these dangerous cartels.
  • There is also a growing presence of Mexican cartels operating fentanyl and nitazene synthesis labs in Canada.  A recent study recognized Canada’s heightened domestic production of fentanyl, and its growing footprint within international narcotics distribution

USING OUR LEVERAGE TO ENSURE AMERICANS’ SAFETY: Previous Administrations failed to fully leverage America’s economic position as a tool to secure our borders against illegal migration and combat the scourge of fentanyl, preferring to let problems fester.

• Access to the American market is a privilege. The United States has one of the most open economies in the world, and the lowest average tariff rates in the world.
• While trade accounts for 67% of Canada’s GDP, 73% of Mexico’s GDP, and 37% of China’s GDP, it accounts for only 24% of U.S. GDP. However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.
• Tariffs are a powerful, proven source of leverage for protecting the national interest.  President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first.
• Though previous Administrations have failed to leverage America’s combination of exceptional strength and its unique role in world trade to advance the security interests of the American people, President Trump has not.

PRESIDENT TRUMP IS KEEPING HIS PROMISE TO STOP THE FLOOD OF ILLEGAL ALIENS AND DRUGS: When voters overwhelmingly elected Donald J. Trump as President, they gave him a mandate to seal the border. That is exactly what he is doing.

• The Biden Administration’s policies have fueled the worst border crisis in U.S. history.

• More than 10 million illegal aliens attempted to enter the United States under Biden’s leadership, including a rising number of Chinese nationals and people on the terror watchlist.
• This problem is not confined to the southern border – encounters at the northern border with Canada are rising as well.
• The sustained influx of illegal aliens has profound consequences on every aspect of our national life – overwhelming our schools, lowering our wages, reducing our housing supply and raising rents, overcrowding our hospitals, draining our welfare system, and causing crime.  
• Gang members, smugglers, human traffickers, and illegal drugs and narcotics of all kinds are pouring across our borders and into our communities.
  • Last fiscal year, Customs and Border Protection (CBP) apprehended more than 21,000 pounds of fentanyl at our borders, enough fentanyl to kill more than 4 billion people.
  • It is estimated that federal officials are only able to seize a fraction of the fentanyl smuggled across the southern border.  
• These drugs kill tens of thousands of Americans each year, including 75,000 deaths per year attributed to fentanyl alone.
  • More Americans are dying from fentanyl overdoses each year than the number of American lives lost in the entirety of the Vietnam War.

BUILDING ON PAST SUCCESS: President Trump continues to demonstrate his commitment to ensuring U.S. trade policy serves the national interest.

• As President Trump said in the Presidential Memorandum on American First Trade Policy, trade policy is a critical component in national security.
• President Trump promised in November to “sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
• During his first term as President of the United States, President Trump established the President’s Commission on Combating Drug Addiction and the Opioid Crisis and declared the Opioid Crisis a public health emergency.
• President Trump also has a long record of putting America first on trade. In his first term, President Trump successfully used threats of tariffs on Mexico to help secure our border.
• When our national security was threatened by a global oversupply of steel and aluminum, President Trump took swift action to protect America’s national security by implementing tariffs on imports of these goods.
• In response to China’s intellectual property theft, forced technology transfer, and other unreasonable behavior, President Trump acted with conviction to impose tariffs on imports from China, using that leverage to reach a historic bilateral economic agreement.
• Just last week, President Trump leveraged tariffs to successfully resolve national security concerns with Colombia, swiftly reaching an outcome that prioritizes the safety and security of the American people and the sanctity of our national borders.

Fact Sheet: President Donald J Trump Imposes Tariffs on Imports from Canada, Mexico and China