The Wall Street Journal reports:

The world economy could face a crash similar to the Great Depression of the 1930s unless the U.S. rows back on its plans to impose steep tariffs on imports, a senior official at the International Chamber of Commerce warned.

“Our deep concern is that this could be the start of a downward spiral that puts us in 1930s trade-war territory,” said Andrew Wilson, deputy secretary-general of the ICC, which promotes global business and trade. High tariffs on foreign goods imported into the U.S. in that decade contributed to a damaging global recession. The downturn plunged nearly a third of the global workforce into unemployment and slashed production at heavyweight industrial economies Germany and the U.S. by half, according to research from the International Monetary Fund.

The likelihood of a similarly severe blow to the global economy is high, Wilson said in an interview Tuesday. “Right now it’s a coin-flip,” he said. “It comes down to whether the U.S. administration is willing to rethink the utility of tariffs.”

His comments come after tariffs of 25% on imports from Canada and Mexico came into effect in the U.S., stymieing hopes of an eleventh-hour reprieve. Fresh duties were also added to Chinese goods sold to the country. Trump has promised to impose similar tariffs on European goods, raising the prospect of retaliation in kind and a global trade war.

“That puts us in a remarkably precarious position that will cloud the global economy for the coming months,” Wilson said. [Continue reading…]

Brian Winter writes:

A clear sign of the impending transformation of U.S.-Mexico ties came a week ago in an interview with Donald Trump’s special envoy to Latin America, Mauricio Claver-Carone. Speaking to CNN en Español, Claver-Carone piled praise on President Claudia Sheinbaum and her “extraordinary” efforts to control immigration.

“She has shown herself to be a great leader,” Claver-Carone enthused, comparing her favorably to her predecessor Andrés Manuel López Obrador. He lauded Sheinbaum’s security team, and the sharp decline in border crossings since Trump took office. “I think what President Sheinbaum knows and understands … is that with migration controlled, and an appropriate security policy, Mexico could be a much more successful country.”

The interviewer then asked the obvious question: If cooperation has been so good, wouldn’t it be a mistake to pass 25% tariffs, which most economists agree would damage both countries?

“They’re wrong,” Claver-Carone replied, saying those same economists “pushed the first free trade deal between the United States and Mexico which basically emptied out and caused a terrible economic outlook for half of the United States.” He added: “There is no reason or right for the United States to be the only country that the world can export to free of any tax.”

For many observers in Mexico and elsewhere, this was proof of the dreaded concept of “delinkage”—the idea that no matter how thoroughly Sheinbaum cooperated on bilateral issues, the Trump administration was determined to press ahead with major tariffs anyway. And indeed, at midnight Tuesday, even after a week in which Mexico agreed to extradite 29 drug cartel leaders, and the U.S. Border Patrol announced migration and fentanyl seizures had declined to multi-year lows, the White House implemented 25% tariffs on both its southern and northern neighbors. [Continue reading…]

The Associated Press reports:

President Donald Trump’s trade wars threaten to claim a casualty on the home front: the American auto industry.

If the president goes ahead with 25% taxes on imports from Canada and Mexico on Tuesday, he will disrupt more than $300 billion in annual U.S. automotive trade with its two neighbors, wreck supply chains that have been operating for decades and likely push up the already-forbidding price of new cars.

The tariffs pose an “existential” threat to North American auto production, said David Gantz, a fellow at Rice University’s Baker Institute for Public Policy. They will push up “the cost of everything that’s imported from Mexico or Canada that goes into a car assembled in the U.S.” [Continue reading…]

USA Today reports:

The head of the Canadian province of Ontario has repeatedly promised strong retaliation against the U.S. tariffs going into effect against Canadian goods, ensuring “America feels the pain.”

President Donald Trump announced Monday the delay on tariffs against Mexico and Canada was over, and thus a 25% tax on most imports from the trade partners went into effect after midnight.

Ontario Premier Doug Ford, leader of the Progressive Conservative Party of Ontario, said at a press conference Tuesday he would apply a 25% surcharge on energy exports to New York, Michigan and Minnesota and would consider restricting the electricity exports down the line if the tariffs persist. He repeatedly placed the blame solely at Trump’s feet.

“A tariff on Canada is a tax on Americans,” Ford said at the Prospectors and Developers Association of Canada convention Monday. “I will do everything, including cut off their energy with a smile on my face. And I encourage every other province to do the same.” [Continue reading…]