Trump tariffs on Canada, Mexico and China snap into effect

US agricultural products, including chicken, wheat, corn and cotton. Now Beijing also added 10 US firms to its unreliable entity list. Now for more analysis, we'll speak now with Doctor John Donaldson, associate professor of Political Science at the School of Social Sciences at the Singapore Management University. Doctor Donaldson, thank you for joining us this morning on the Morning Report.

The biggest question of the day right now, uh, Doctor Donaldson, has the much feared trade war officially begun? It's, it's begun. The opening salvos actually happened, uh, not just today but just in the, in the last few weeks, and I think, uh, the fighting has been joined if we want to talk in war terms. Uh, this is unprecedented, not, not in history, but over the last several decades, the global trade architecture has been firmly in place.

And many countries, especially, uh, countries like the US has have benefited greatly. uh, this is very consequential, you know, even for far away Singapore, uh, which relies on the, on the global trade architecture that uh has brought prosperity, uh, to, you know, to places, not just in Singapore but really around the world. China and Canada have made its countermeasures known, uh, Mexico set to announce this this weekend. Looking at their retaliatory levies so far, Dr. Donaldson, how

do you view their response? Can their respective economies actually afford to slap those retaliatory tariffs? I think they had no choice, you know, it's a tit for tat game. If they did not put retaliatory tariffs, they would be um You know, showing severe weakness, there would be absolutely no

incentive for the Trump administration to back down. Uh, prices in all three countries are going to be increasing, and so the pressure on all three leaders will be ratcheting up, uh, when, when China, uh, Harriano, you mentioned all of these agricultural trade goods, and there's no surprise there that, uh, this will be hurting uh farmers.

are among, you know, Trump's biggest supporters, but also the prices of basic goods are going to be increasing and whether the US pop populists will allow this and will be able to bear that, I think it's an even greater question than what the Canadians and Mexicans are. This is not a trade war that they started and I think the, I think they're they're.

The population will understand that and are supportive of these retaliatory moves, but I think most people really hope for a return to the trade system that we had before because it allowed countries to trade for what they needed, and the, the, the, what do you call the system before that if it was, you could call it a system was to go to war with each other to get what we need and trade is certainly much better than war.

Uh, these tariffs, Dr. Donaldson on Canada, Mexico, China, they took effect yesterday and they were meant to happen earlier, but there was a last minute deal that paused it. Now we hear of the Trump administration signaling tariff relief for Canada and Mexico. What do you suppose is going on behind the scenes? I've heard mixed signals. I mean, part of the question

is what does Trump want? Usually when you put or threaten these kinds of terrorists, you are saying unless you do X. From my understanding, Canada and Mexico have made great strides on the kinds of things that the Trump administration wanted. The uh the numbers of illegal immigrants trying to are sort of undocumented people trying to come in through the southern border of the United States has dropped to almost nothing.

And then, uh, you know, the US, uh, is blaming Canada in part for its uh fentanyl crisis, and, uh, and Canada, you know, responds by saying quite reasonably, what more do you want us to do? And, and ultimately fentanyl is a US crisis. It's not because of uh a porous Canadian-US border. Uh, in the meantime, uh, both countries. You know, the US exports more than $1 billion to

Canada every single day. Canada exports more than $1 billion US dollars every single day to Canada and to have that kind of volume of trade flow being disrupted is going to be a huge game changer and will have a massive effect, not just on these two economies, but on the uh on the global economy. as well. Doctor Donaldson, you mentioned earlier that these countries, they don't have a choice. They have to play the

tit for tat game, they're being cornered. If they don't do anything, it's it's just a poor showing of, you know, not standing up to the bully in in in a certain sense, but ultimately, to what end though, what's the end game here then? Who's gonna, who's gonna show hands first? Yeah, I think that's, I think that's really the big question, Andrea.

You put your finger right on it. There's no real answer even basic questions like what does Trump really want now Trump has been pointing to, long been pointing to things that are legitimate, that there are, uh, you know, trade imbalances, there's unfair, uh, trade, um, you know, uh, rules that are happening really on.

All sides, but the, the, the institutions that have been set up to resolve those uh trade disputes, the World Trade Organization, nobody uh talks about the World Trade Organization anymore. Normally when there would be a kind of a dispute about trade dumping or other things like that, you would go to the World Trade Organization, they would hear it and they would adjudicate it um that that has. Failed, uh, I'm not, but I'm, but I'm not sure whether it would be fair to blame the WTO for that.

Trump has not really tried to go to the World Trade Organization. He's blocking appointments of American judges to the World Trade Body and really has crippled it, uh, and maybe he's, I mean, he's never had faith in the World Trade Organization, but um. You know, the trade wars cannot be our first step.

It the the these institutions and the concept of basic trade between countries has been part of the, uh, you know, worldwide economic architecture for decades, and Trump has utterly upended that, and, uh, I have no idea where this is gonna end, but it's not gonna be pretty for anybody. Another thing that we want, we want to take note of with regard to the tariff threats, they have appeared

to pressure firms to invest in America. We're seeing Taiwanese chip making giant TSMC planning to spend an additional $100 billion in the US. Is this a sign of more to follow, you think, Dr. Donaldson, as Trump proof measures?

I think that's, that's what Trump hopes that American manufacturing will take over for, uh, Chinese manufacturing or or what have you, but number one, if that was in any way efficient in terms of a cost, uh, you know, benefit analysis, but some of that would have happened before, well before now, and the other is none of this can happen quickly. And in the meantime, uh, you know, it will take months.

uh, to replace the kinds of uh imports to substitute for the imports that that the US has been uh relying on and in the meantime, you know, what are you going to do the the prices will, will go up and consumers have not consumers, voters have shown that they take prices very, very seriously. It was the number one issue that the Biden administration uh failed to.

To manage some of that was real, some of that was uh perception, but people's perceptions are important and when prices go up and the prices of eggs in the United States right now is really one of the most actually one of the most important variables and should be, uh, utmost, but it's just gonna go up from here on out, and, and eggs is where it starts when, when the cost of cars, with the cost of a lumber, when costs of

Uh, everything that, uh, that Americans use every day goes up. Uh, I wonder what how Trump, uh, will and how the Trump administration will respond to that kind of pressure from his own voters. Yeah, eggs being the new Big Mac index for American spending, uh, it's very interesting turn of events there. I think it was something like $30 in uh in Ohio or something like that.

Um, going back to your point, Dr. Donaldson, about how the cost benefit of actually doing business in the US, particularly when it comes to manufacturing in the case of TSMC. Clearly, not many companies can actually afford to do this given the expense. So which other companies do you foresee being able to afford having their manufacturing base in the US? I mean, if we look at Elon Musk, he's not exactly um you know, dominating the EV market in the US as much as he is in other parts of the world.

Yeah, I think that's, you know, that's also a very good point, but I think it's, it's not only companies. So for instance, if you're an American car manufacturer, you've got, uh, auto parts being manufactured all over the world, and that's been, you know, uh, you know, part of the, of, of the way to reduce the, the price of manufacturing cars.

And so it's not just companies moving in, but hoping that, you know, that, uh, you know, auto parts manufacturing will come back into the United States, but trade is Based on the system that each country has, has a comparative advantage and low cost workers is not one of our comparative, uh, uh, not one of the United States' comparative advantages. We do have advantages. We do export quite a lot and uh uh but but then countries that have other advantages can trade with us and uh you know,

through that, uh, uh, countries do benefit. There's a lot of good reasons to be critical about the fairness of trade in general. Uh, but this is not the way, uh, to solve those kinds of imbalances. Uh, part of the question is that when you're shipping goods all over the world, as the, as the trade architecture has created, what's the impact on climate change which with all of the, uh, petroleum being used and maybe.

That's an issue about how we price uh natural resources, how we price uh carbon and other things like that, but sending out uh tariffs as well as pulling out of, you know, Paris trade, uh, you know, negotiations on climate change are not the way to deal with any of these problems and uh. You know, beyond all of that, you know, is, uh, Trump's hostility to our former allies, uh, his threats to, uh, you know, uh, make Canada the 51st state and, uh,

and take over Greenland and Panama. The, the, the thing is we already have a military base in Greenland. We already are importing raw materials from Greenland and it's kind of like what else does is Trump really looking for. Besides reasserting an American empire that has not been, uh, you know, salient for a century. Doctor Donaldson, another thing that we want to talk about, uh, Trump wants to reduce his exposure to Europe, which would mean a changed

relationship between the US and Europe. Meanwhile, China is seizing the opportunity to woo Europe and fill the vacuum, as one commentator put it, being the adults in the room. What new shape will the global order take you think? I mean that is a, you put your finger on a really good question and right now today is uh when all of the, all of the answers that were settled, you know, in even as early as early as December of last year, as recently as December of last year

are now up in the air. Why the US would shift its attention from Europe and and increase its hostility. threatening Denmark, you know, I mean, for goodness sake, uh, and throw its lot in with Russia and North Korea. I, I have no idea why and even Trump, I think most uh not hardcore Trump supporters, but you know the the the swing voters who voted for Trump did not expect any of any of this, certainly belligerent, yes, certainly hostility, yes, but the idea.

of taking over Panama and Greenland and Gaza and Canada was beyond the wildest dreams. It's a brave new world. Actually it is not a brave new world, it's a new world, and we're going to have to be brave and look to the true adults in the room, which uh which very fortunately includes the government of Singapore as well as others who are trying to figure out. This chess that we're in, it's not a chess. He's thrown. I think I think I think is the term you're

looking for. I think all of us are just trying to make sense of uh Mr. Trump's latest moves. A lot of them questionable for sure how much of it has to do with his uh business negotiating muscle that he's flexing rather than having any political nuances which we know it's not his game, it really isn't his game, uh, but I think this presidency is going to be a test of that for sure. Doctor Donaldson, always a pleasure to have you on the show. It's been great to hear some clarity, to get some kind

of clarity over uh the situation as much as we can. Uh, so thank you very much for spending the morning with us. Thank you so much. I really appreciate it. I wish I had more clarity to give. That's all of us, to our listeners as well, Doctor Donaldson, appreciate it nonetheless. That's Doctor John Donaldson. He's associate professor of Political Science at the School of Social Sciences at the Singapore Management University.