Trump Says Americans Could Feel ‘Some Pain’ from His New Tariffs That Are Triggering a Trade War

 The flags of Mexico, the United States and Canada fly in Ciudad Juarez, Mexico February 1, 2025. (Reuters)
The flags of Mexico, the United States and Canada fly in Ciudad Juarez, Mexico February 1, 2025. (Reuters)
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Trump Says Americans Could Feel ‘Some Pain’ from His New Tariffs That Are Triggering a Trade War

 The flags of Mexico, the United States and Canada fly in Ciudad Juarez, Mexico February 1, 2025. (Reuters)
The flags of Mexico, the United States and Canada fly in Ciudad Juarez, Mexico February 1, 2025. (Reuters)

President Donald Trump said Sunday that Americans could feel “some pain” from the emerging trade war triggered by his tariffs against Canada, Mexico and China, and claimed that Canada would “cease to exist” without its trade surplus with the United States.

The trade penalties that Trump signed Saturday at his Florida resort caused a mix of panic, anger and uncertainty, and threatened to rupture a decades-old partnership on trade in North America while further straining relations with China. But by following through on a campaign pledge, Trump may have simultaneously broken his promise to voters in last year's election that his administration could quickly reduce inflation.

“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!),” Trump said in a social media post. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

His administration has not said how high that price could be or what improvements would need to be seen in stopping illegal immigration and the smuggling of fentanyl to merit the removal of the tariffs that Trump imposed under the legal justification of an economic emergency. The tariffs are set to launch Tuesday.

In his Truth Social post, Trump took particular aim at Canada, which responded with retaliatory measures. Trump is placing a 25% tariff on Canadian goods, with a 10% tax on oil, natural gas and electricity. Canada is imposing 25% tariffs on more than $155 billion on US products.

Trump railed against Canada's trade surplus with the United States: “We don’t need anything they have. We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use.”

Despite Trump’s claim that the USdoes not need Canada, one-quarter of the oil that the America consumes per day is from its ally to the north.

Trump contended that without that surplus, "Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!”

Canada’s ambassador to Washington has said the US had a $75 billion trade deficit with Canada last year, but noted that one-third of what Canada sells into the US is energy exports and that there is a deficit when oil prices are high. About 60% of US crude oil imports are from Canada.

Canadian Prime Minister Justin Trudeau is encouraging Canadians to buy more Canadian goods, and says Trump's moves will only cause pain across North America. More than 75% of Canada's exports go to the US.

“It is going to have real consequences for people, for workers on both sides of our border," Trudeau said Saturday night. “We don’t want to be here. We didn’t ask for this but we will not back down in standing up both for Canadians and for the incredible successful relationship between Canada and the United States.”

Mexico's president, Claudia Sheinbaum, also announced new tariffs and suggested the US should do more within its own borders to address drug addiction.

The Chinese government said it would take steps to defend its economic interests and intends to file a lawsuit with the World Trade Organization.

For Trump, the open question is whether inflation could be a political pressure point that would cause him to back down. As a candidate, Trump repeatedly hammered Democrats over the inflation under President Joe Biden that resulted from supply chain issues during the coronavirus pandemic, the Biden administration’s own spending to spur the recovery and Russia's invasion of Ukraine.

Trump said his previous four years as president had low inflation, so the public should expect the same if he came back to the White House. But he also said specifically that higher inflation would stagger the US as a nation, a position from which he now appears to be retreating with the tariffs.

“Inflation is a disaster,” he said at a Philadelphia campaign rally. “It’s a country-buster. It’s a total country-buster.”

Outside analyses make clear that Trump's tariffs would hurt the voters that he intended to help, meaning that he might ultimately need to find a resolution.

An analysis by the Budget Lab at Yale shows, if the tariffs were to continue, an average US household would lose roughly $1,245 in income this year, in what would be the overall equivalent of a more than $1.4 trillion tax increase over the next 10 years.

Goldman Sachs, in a Sunday analyst note, stressed that the tariffs go into effect on Tuesday, which means they're likely to proceed “though a last-minute compromise cannot be completely ruled out.”

The investment bank concluded that because of the possible economic damage and possible conditions for removal that “we think it is more likely that the tariffs will be temporary but the outlook is unclear.”



Oil Prices Climb, but Recession Fears and Tariffs Limit Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Prices Climb, but Recession Fears and Tariffs Limit Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices rose 1% on Tuesday, helped by weakness in the US dollar, although gains were capped as concerns mounted over a US slowdown and the impact of trade tariffs on global economic growth.

Brent futures rose 73 cents, or 1.05%, to stand at$70.01 a barrel at 1116 GMT after falling in early trade. US West Texas Intermediate crude futures climbed 66 cents, or 1%, to $66.69 a barrel after previous declines as well.

Both benchmarks closed 1.5% lower in the previous session.

The dollar index hit a four-month low, making oil less expensive for overseas buyers.

Investors are closely monitoring OPEC+ plans after the producer group announced plans to increase output in April, Reuters reported.

A scaling back of US tariffs would ease fears of inflation and economic contraction, said PVM analyst Tamas Varga, but the recent oil price plunge meant it was "hard to see OPEC+ going ahead with its plan and releasing oil back to the market from April."

On Friday, Russia's Deputy Prime Minister Alexander Novak told reporters that the OPEC+ producer group would go ahead with its April increase but may then consider other steps, including reducing production.

Brent is finding strong technical support at around $70 a barrel and may look to stage a bounce, said Suvro Sarkar, energy sector team lead at DBS Bank, adding that the OPEC+ supply response would be flexible, depending on market conditions.

"If oil prices fall below the $70 per barrel mark for an extended period, output hikes may be paused in our opinion. OPEC+ will also keep a careful eye on Trump's Iran and Venezuela policies," he said.

US President Donald Trump's protectionist policies have shaken global markets, imposing and delaying tariffs on major oil suppliers Canada and Mexico, while also raising duties on China, prompting retaliatory measures.

Over the weekend, Trump said a "period of transition" was likely and declined to rule out a US recession.

Stocks, which crude prices often follow, slumped on Monday, with all three major US indexes suffering sharp declines. The S&P 500 had its biggest one-day drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.

Investors await US inflation data due on Wednesday for clues on the path of interest rates.

In the US, crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute at 4:30 p.m. EDT Tuesday and the Energy Information Administration at 10:30 a.m. EDT Wednesday.