US Customs Tariff: A Brief Respite Amid Swift Chinese Reaction

• Trump suspends tariffs on Canada and Mexico after the two countries cooperated on border issues but keeps tariffs on China. 
• The three countries represent significant and significant trading partners of the United States. 
• China responds to US tariffs initially on matters important to America Tariffs could lead to higher living costs and inflation in the United States. 

US Customs Tariffs: Between Comment and Chinese Response!

US President Donald Trump threatened and decided to impose custom tariffs on Mexico and Canada at a rate of 25%, and on all Chinese imports at a rate of 10%, but the US President returned and suspended the tariffs on the two border countries (Canada and Mexico) after the presidents of both countries pledged to further cooperate in the field of border control with America. However, this suspension did not apply to the tariffs against China, which prompted China to respond quickly through the Ministry of Finance, when it said that China would impose tariffs on US imports, including a 15% tariff on coal and liquefied natural gas in the United States and a 10% tariff on crude oil, agricultural equipment and some cars, In addition to increasing measures against giant American companies such as Alphabet, the parent company of Google, and to confirm that these new tariffs would be effective on February 10.

Although the US President justified these tariffs as guaranteed to reduce the cost of living for Americans, he himself returned and admitted that these tariffs would lead to an increase in the cost of living for Americans in the first phase of these tariffs. These tariffs could actually lead to an increase in the cost of living and keep inflation high, if we focus on the products that will be affected by the tariffs, the most important of which are:

• Crude oil, of which Canada provides more than 4.3 million barrels to America daily.
• Lumber and electricity from Canada.
• Plastic, textiles and computer chips from China.
• Clothing and auto parts from Mexico.

The Three Countries Are the Pillars of US Trade:

In fact, by referring to the US Census Bureau, it is noted that the countries that Trump imposed custom tariffs will represent an economic headache for the US economy, especially since they are the first countries in terms of US imports and exports.

The United States Census Bureau indicated these countries as follows during the first eleven months of 2024:

From the previous data, serious matters become clear, especially regarding the potential rise in inflation for the American, as America relies heavily on crude oil and electricity from Canada, which can be directly reflected and felt by the American through the gasoline and electricity needed, whether individually or institutionally, especially public data centers and artificial intelligence data centers.

Based on the above preliminary data, this can be reflected in the complexity of the Federal Reserve's position this year towards reducing interest rates by the expected number of times, which may positively affect the US dollar and make it more cohesive, especially since it touched levels of 110, the highest levels since 2022.

The Impact of US Customs Tariffs on Financial Markets and Investments

While this cohesion in high interest rates may represent negative matters for the financial markets, which have recovered mainly on the background of optimism about reducing interest rates by a better number of times, especially at the beginning of the third quarter of 2024.

While the matter may be vague for gold, whose recovery due to the rise in optimism about reducing interest rates has turned into cohesion due to fears of a possible trade war.

However, it is worth following the news about the US President and what he might do regarding the US custom tariffs in the coming times, especially since the movement to suspend the tariffs after the official Mexican and Canadian cooperation may lead to other developments that may cast a direct shadow on all investment tools and financial markets.