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The tariffs President-elect Donald Trump has threatened to impose on imports from Mexico and Canada would significantly increase U.S. inflation next year and modestly curtail economic growth , economists and trade experts say. Monday, Trump vowed to slap all goods shipped to the U.S. from Mexico and Canada with a 25% tariff and all Chinese imports with a 10% levy on his first day in office, Jan. 20. In a social media post, Trump said his aim is to pressure the countries to stop the flow into the U.S. of illegal drugs and immigrants who lack permanent legal status. Several experts said the threat was likely a negotiating tactic intended to prod the countries to take action on drugs and immigration. Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, said the Trump administration likely would schedule the fees to take effect in March, giving the countries time to negotiate a deal that addresses the issues. Otherwise, he said, the levies likely would spark retaliatory tariffs from Mexico and Canada, creating a potentially intractable trade conflict. “At that point, it’s very difficult to unwind the tariff wars,” Hufbauer said. Capitalize on high interest rates: Best current CD rates But if Trump follows though on his pledge, it would substantially boost inflation next year after pandemic-induced consumer price increases had largely abated, economists said. Economists already had anticipated at least a 10% tariff on Chinese imports next year and built that into their forecasts. During his presidential campaign , Trump said he would impose a 10% to 20% tariff on all imports and as much as a 60% duty on Chinese goods to incentivize companies to move production to the U.S. or buy American-made products . What does America import from Mexico? High tariffs on Mexico and Canada were not expected and would violate the North American trade pact that took effect in 2020. The U.S. imported $480 billion in goods from Mexico last year, including vehicles, electrical equipment, machinery, furniture, plastics and metal, according to Trading Economics. How much does the US import from Canada? The $429 billion in 2024 imports from Canada included vehicles, machinery, wood, metal and pharmaceutical products, Trading Economics figures show. New fees on goods from Mexico, Canada and China would cost a typical American family an additional $1,300 a year, said Brendan Duke, senior director of economic policy a the left-leaning Center for American Progress. Tariffs would especially hobble the U.S. auto industry, which imports raw materials from Mexico to make parts that are then shipped back to that country for vehicle assembly, Hufbauer said. Some parts cross the border several times as they’re enhanced before vehicles are sold to American consumers, potentially piling on several rounds of tariffs. The duties could increase the price of cars and trucks sold in the U.S. by about 10%, Hufbauer said. And by damping auto sales or prompting manufacturers in other countries to switch to non-U.S. parts suppliers, the levies could mean layoffs for some of the 1 million U.S. auto manufacturing workers., Hufbauer said. While manufacturers or retailers could absorb some of the cost increases, Deutsche Bank figures most would be passed through to American consumers. About 5% of the goods and services that make up the Fed’s preferred inflation index are imported from Canada or Mexico, Deutsche Bank estimates. What is the inflation target for 2025? The research firm had expected a core measure of that inflation index, which excludes volatile food and energy items, to dip just slightly from 2.7% in September to 2.6% by the end of next year because of Trump’s planned tariffs on Chinese goods. Duties on the North American trading partners likely would push inflation higher, to 3.7% next year, Deutsche Bank said in a research note. Without any levies, inflation probably would have tumbled to 2.2% in 2025, said Deutsche Bank economist Justin Weidner. Goldman Sachs predicts tariffs on Mexico and Canada would lead to a slightly smaller 0.9% rise in the core inflation measure in 2025. But that measure had fallen sharply from a peak of 5.6% in early 2022. “Inflation was set to come down” further, Weidner said. “This would undercut the progress.” He added that prices theoretically would increase just next year but wouldn’t continue to rise due to tariffs after that, allowing inflation to return to the lower rate that would have prevailed absent the levies in 2026. But the level of prices would be permanently higher, Weidner said. Trump won the presidential election early this month because of Americans’ frustration over inflation and their perception of the Biden-Harris administration’s role in contributing to it, polls showed. Trump pledged to bring down prices. How much will the US economy grow? The new fees also would hurt economic growth. By reducing consumer spending and prompting Mexico and Canada to retaliate with tariffs on U.S. shipments to those countries – largely on agricultural products – the fees could lower the nation's economic growth by three-tenths of a percentage point in 2026 to just under 2%, Weidner said. Among other effects, higher inflation could mean the Federal Reserve will lower interest rates fewer times next year, damping consumer and business borrowing and economic activity, Weidner said.promo code ye7 。

President-elect Donald Trump will likely return to office skeptical about NATO’s value and Europe’s contribution to its own security. Officials who worked directly with Trump in his first term are convinced that he has no qualms about reducing or even ending the United States’ commitment to the Alliance. But Trump will again be a transactional president who wants to demonstrate strength. With the proper initiatives, European allies can save the Alliance. These allies should start by focusing the June 2025 NATO Summit in The Hague on Europe’s strategic responsibilities, agreeing on ways that Europe can remove some of the United States’ defense burden. Major European powers are faced with flagging economic growth, weakened leadership, and Ukraine war-weariness. Therefore, much of the leadership burden will fall on new NATO Secretary General Mark Rutte. He is up to the task. As a former center-right Dutch prime minister, Rutte is known to have a cordial relationship with Trump, and like Trump, he is a dealmaker. Ukraine will be first on the docket. Trump is pushing for a quick settlement that would probably result in continued Russian occupation of some Ukrainian land. Rutte has already stressed that the United States’ security interests lie in preventing a Russian victory. Europe should seek to shape Trump’s initiative accordingly. Whatever the terms of a ceasefire, key to lasting peace will be a solid Western commitment to long-term Ukrainian security. That should be Europe’s principal focus. Ideally, that would mean NATO membership for Ukraine. Europe should encourage that outcome, but Trump may resist. If so, the European Union (EU) could step up by prioritizing Ukrainian EU membership, which includes the somewhat weaker Article 42.7 defense commitment . It should also deploy European troops to Ukraine post-conflict to underscore its pending commitment and pledge to provide the majority of long-term military aid to Kyiv. The June 2025 NATO Summit itself can celebrate the fact that twenty-three of NATO’s thirty-two countries now meet the 2 percent of gross domestic product (GDP) defense spending goal. The Alliance needs to encourage the remaining nine to meet that goal soon, but it should also take the next big step. Chinese military spending—especially on naval assets, missiles, and nuclear weapons—is challenging the United States’ traditional military dominance in East Asia. The United States must respond to maintain deterrence in that region. To help with that, Europe needs to backfill in its own region. To do this, at its upcoming summit, NATO should agree to raise the 2 percent goal, perhaps to 3 percent of GDP by the end of the decade. Should Trump abandon the United Sates’ NATO commitment, that would present an absolute minimum European defense spending level. But pledging it in advance could keep the United States in the Alliance. Trump could take credit while NATO gets stronger. Moreover, the new defense spending goal should be targeted on specific defense requirements. One requirement could be the development of adequate European forces to meet the supreme allied commander Europe’s new defense plans for the continent. A second requirement could be the purchase of enough so-called enablers to meet massive European shortfalls in this area. Such enablers include strategic lift, air-to-air refueling, modern operational intelligence, communications, and command and control. Each of these is essential to credible modern deterrence and, if that fails, to fighting a war. A third requirement should be building additional European naval assets that would allow the United States to swing many of its naval forces to Asia without degrading NATO’s defenses. Meeting these defense requirements would entail enhanced European defense industrial cooperation and innovation. This would be a job for the EU, but programs should be designed in such a way that US defense firms and their technology are not excluded. These budgetary steps should be augmented by larger enhanced forward deployment of European troops. Currently, there are NATO enhanced forward deployments in eight of NATO’s frontline countries. But the size of these forces is generally small—battalion-sized battle groups of about one thousand troops each. Some, like the one in Lithuania, have been upgraded to continuous brigade-sized groups, or up to about five thousand soldiers each. All eight of these should be fully upgraded to the brigade level, provided with long-range artillery and air defenses, and augmented with prepositioned stocks for future reinforcements. The US contribution would be to further upgrade its presence in Poland. At the global level, the June summit should establish a new division of responsibility among NATO, the EU, and the United States. This could further lighten the US burden. NATO’s prime responsibility would be defense of its treaty area. The EU might take prime responsibility for conflicts to its south, primarily in Africa. Security in the Middle East might be a joint national responsibility with a US lead, as it has been in the Red Sea. This transatlantic division of strategic responsibility should extend to Asia, with new steps taken at The Hague. Previous summits have moved NATO in this direction, and North Korea’s recent combat role in the Ukraine war further underlines the linkage between European and Asian security. While the United States would bear the principal responsibility of supporting its Asian allies against attack, Europe can do more to enhance deterrence there. NATO would not extend its Article 5 commitment to Asia. But by continuing Asian participation in NATO summits, creating new NATO liaison offices in Asia, warning China about the dire consequences of invading Taiwan, and participating in more freedom-of-navigation exercises with the United States, European countries can contribute more to the US effort to deter war in Asia. Eventually, Europe may also need to address the ten-fold nuclear imbalance between Russia and Europe. It was the US strategic nuclear deterrent that kept the peace during the Cold War. Should the United States’ nuclear umbrella be withdrawn from Europe as part of a US withdrawal from NATO, Europe’s two nuclear powers, Britain and France, may need to reconsider their current minimal-deterrent posture. Without the US nuclear umbrella, Europe would be more vulnerable to Russian nuclear blackmail. This is likely to be a back-room discussion at The Hague. This agenda for The Hague summit is a tall order. This will be especially true if the United Sates and Europe are in a trade war triggered by the new tariffs promised by Trump. But the security stakes are exceedingly high. It’s time for Europe to step up, play the enhanced security role that it should play, and save NATO in the process. Hans Binnendijk served as National Security Council senior director for defense policy in the Clinton administration and as director of the Institute for National Strategic Studies at the National Defense University. He is a distinguished fellow at the Atlantic Council. Timo Koster served as director of defense policy and capabilities at NATO and was ambassador-at-large for security policy and cyber for the Netherlands. He is a nonresident senior fellow at the Atlantic Council’s Scowcroft Center.

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