Since January 2025, the United States government under Donald Trump has significantly changed its trade policies and imposed new tariffs on most of its trading partners. These changes have not only impacted the U.S. economy but have also had profound effects on trade agreements with Canada and Mexico, particularly the United States-Mexico-Canada Agreement (USMCA).
Fundamental Changes in Trade Policies
Trump's trade policies have relied on executive powers instead of relying on trade agreements and consultations with industries. This new approach, along with the increase in tariffs, has created ambiguities for trading partners regarding whether trade agreements with the United States are still valuable. For example, the additional tariffs imposed on various products indicate that even products covered by trade agreements may be subject to these tariffs.
Read more: The Impact of China's Economic Recession on Three African Economies and Trade Changes
Impact on Trade Agreements
Trade agreements were originally created to reduce trade barriers and tariffs, but the increase in tariffs under executive powers has made it impossible for these agreements to protect their trading partners from new tariffs. For instance, imported products from Bahrain under the free trade agreement, despite not paying MFN tariffs, have faced a 50 percent tariff. Additionally, partner countries like South Korea and Colombia have also faced increased tariffs, indicating that the type of exports from a country may have a greater impact on tariff rates than the existence of a trade agreement.
While trade agreements can reduce some tariffs, they often cannot prevent increases in tariff rates. For example, the average tariff rate on imports to the United States has risen from 2.2 percent to 9.9 percent, while for partner countries, this rate has increased from 0.2 percent to 4.6 percent. These increases have particularly affected long-standing trading partners like Canada and Mexico and generally indicate that trade agreements may no longer serve as a reliable tool for reducing tariffs.
Ultimately, the fundamental question is whether trade agreements with the United States can remain a viable tool in the future. Given current trends, these agreements may be at risk and require review and strengthening.
Read more: Unexpected 0.4% Growth of the UK Economy Thanks to Artificial Intelligence · Robert Malley's Analysis: Trump Only Has 3 Ways to Deal with Iran
