Tariffs on China but not Mexico, Canada? The stakes in a potential trade war.

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With the self-assurance of an entrepreneur and the bluff of a big-time poker player, President Donald Trump inaugurated a new and uncertain era in U.S. trade relations this week.

Hours before he was to initiate punishing 25% tariffs on America’s two largest trading partners, Mr. Trump agreed to a one-month delay. No trade missions to hash out details. Instead, the president relied on direct one-to-one calls with the leaders of Mexico and Canada to seal deals.

In exchange, they agreed to step up border enforcement initiatives they had already begun. By contrast, America’s third-largest trading partner – China – retaliated with tariffs and other measures of its own when Mr. Trump initiated a smaller 10% rise in the existing duties against it.

Why We Wrote This

In postponing some threatened tariffs but not others, U.S. President Donald Trump is sowing uncertainty for businesses and consumers in his own country and abroad. His tactics could score some wins, but also carry big risks.

It’s not clear he really got that much in concessions from Mexico and Canada. Still, he is expected to use such tactics again.

“Trump will keep using the tariff threats to get little wins, little victories in his dispute with Mexico over the three key themes” of migration, security, and trafficking, says Víctor Gómez Ayala, professor of macroeconomics at the Autonomous Technological Institute of Mexico.

“Obviously, this uncertainty is not going to go away,” says Dan Kelly, president of the Canadian Federation of Independent Business. “We’re going to have to sleep with one eye open for the next four years.”

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