CLEVELAND — President Donald Trump doubled down this week on his plans for an across the board 25% tariff on goods imported from Canada and Mexico, as well an additional 10% on China, countries that make up more than a third of US Trade.
“If you don't make your product in America, which is your prerogative, then very simply you will have to pay a tariff," Trump said Thursday during a virtual address to the World Economic Forum meeting in Davos, Switzerland.
The president said Monday he's setting a date of February 1 for them to go into effect. Canadian Prime Minister Justin Trudeau said that if Trump imposed tariffs on Canada, two things would happen.
"One, Canada will have a strong robust response. As we don’t want this, but we will respond, if necessary, and two, prices for American consumers on just about everything will go up.”
Just this week Cincinnati-based Procter & Gamble said they'll do their best to soften the blow but warned the tariffs might mean consumers will end up paying more for things like Tide detergent.
It could impact the price of cars and car parts, food and alcohol and, yes, gasoline since nearly 60% of U.S. crude oil imports come from Canada.
"Well it would likely be pretty profound," said Patrick DeHaan, head of Petroleum Analysis at Gas Buddy. "Now it could be potentially offset by a major economic slowdown which could reduce demand and reduce some of the blow from tariffs. Motorists could be paying quite a bit more potentially 25-to-50 cents a gallon more."
The Premier of oil rich Alberta, Canada, going even further to predict a hike of $1 a gallon in some states, particularly in the upper midwest. That's because much of the crude oil coming into refineries in the Great Lakes, including Toledo, comes from Canada.
"Far before the U.S. became the world's largest oil producer, much of our imported oil especially here in the Great Lakes came from Canada," said DeHaan. "Why? Because it's really difficult to get oil from west Texas, there's a lack of pipelines."
"There's a lot of pipelines that can connect those refineries in the midwest to Canadian crude oil and so it's been the status quo for decades," he said.
That's why Trump's own former Chief Economic Adviser Gary Cohn said that while tariffs, when used in the right way, play an important role in protecting American jobs, when applied incorrectly, amount to a tax on consumers.
"If you're going to tariffs something that you import, that your citizens want and you're just going to raise the price on it, it becomes a consumption tax. I have had a hard time understanding this concept," Cohn said.
That could then contribute to inflation, which could impact the decision of the Federal Reserve Bank to lower interest rates further. They next meet on Wednesday, three days before Trump threatens that the tariffs will go into effect. The head of the Cleveland Federal Reserve, Beth Hammack, told News 5 last month it's not something they take into consideration ahead of a vote.
"We wait until it happens to deal with it. You never really know what's going to happen with policies," said Hammack. "They tend to evolve over the time that they're being considered and so we don't want to act prematurely, we wait until we see what policies are enacted and then we'll incorporate that into our decision making."
That's something the Director General of the World Trade Organization, Ngozi Okonio-Iweala, also pointed out in Davos this week. The fact that the tariffs weren't imposed on day one as Trump promised they would is an indication to her that nothing is yet set in stone.
"Can we chill. I think we shouldn't get over excited about the issue of tariffs. Let's wait and see what actually is done," she said. "When we look at what has actually been said on the executive orders, it asks for a series of studies on different trade agreements. Even the External Revenue Service is to be studied to see how it can be set up. So I'm just saying could we take a deep breath, let's chill to our members, let's not over react, let's not think of tit for tat."
