Editorial | In the wake of Trump

Donald Trump’s intention, as The New York Times put it this week, is to “leverage America’s economic strength to bully other nations” to his preferred policy positions.

Which is the basis of Mr Trump’s threat – now deferred for a month – to impose a 25 per cent tariff on all goods from Canada and Mexico, the USA’s two biggest trading partners, ostensibly to force them to take action against illegal migrants and the synthetic opioid, fentanyl, that cross their borders into the US. He also complained about their trade surpluses with the United States.

The American president has also implemented an additional 10 per cent tariff on Chinese imports, over a wide range of grievances, including the fentanyl issue.

While Canada and Mexico threatened retaliatory tariffs on US imports, they, understandably, also rushed to find an accommodation with the US president, which accounts for the delay in Washington’s enforcement of the tariffs. The Mexican president, Claudia Sheinbaum, has committed to sending an additional 10,000 troops to her country’s border with the US.

Justin Trudeau, Canada’s prime minister, after a telephone discussion with Mr Trump, announced that he would continue with a previously declared border-hardening programme, including deploying more technology to detect smuggling, and appoint a fentanyl tsar.

There are important lessons for Jamaica and its partners in the Caribbean Community (CARICOM) in these events. This newspaper hopes that the rights have been grasped.

First, while recognising the strength and power of the United States, the impulse, even for small states, ought not to merely fold to every of Mr Trump’s wilful actions. More critical for this region in these uncertain times is the lesson of partnerships, and the imperative, particularly for developing countries, of building coalitions.

Attempting to go it alone and appeasing Mr Trump is unlikely to work.

Or, as The Gleaner previously advised CARICOM, paraphrasing Benjamin Franklin, it is either the community’s members hang together, lest they hang separately. Canada and Mexico appeared early on to have missed the good sense of Mr Franklin’s witticism of nearly two and half centuries ago.

DEEPLY INTERLOCKED

An important fact to note, too, is that while Mr Trump is mercurial, and often reckless, he is not entirely a fool.

His political instincts are feral; he is likely to pause, and perhaps retreat, in the face of presumed strength.

When Mr Trump began berating the US’s North America neighbours over the migration and fentanyl issues, Mr Trudeau’s reflex was to throw Mexico under the bus. He made a placatory pilgrimage to Mr Trump to declare that “the situation on the northern border was vastly different than the Mexican border”.

The situation, though, called for a coordinated response to Mr Trump. Instead, the two countries wasted time and effort squabbling.

Which is where awareness of Mr Trump’s instinct for self-preservation and collaboration by those under assault from Mr Trump are of value.

The US, Canada and Mexico are parties to a tripartite trade agreement, whose trade in 2023 was over US$1.6 trillion. It is likely to have been in the same range last year.

Two years ago, America’s bilateral trade with Mexico was US$798 billion. It imported US$475 billion and exported US$323 billion in goods and services to Mexico. With Canada, the US imported US$419 billion and exported US$354 billion in goods and services.

So, the US economy is deeply interlocked with those of Mexico, its largest trading partner, and Canada, its third-largest after China. Indeed, the USMCA supports millions of jobs in the three countries, including huge numbers in the United States.

The Brookings Institution, a US think tank, estimated that should Mr Trump impose the 25 per cent tariff on its neighbours and both retaliate, it would swipe over three per cent each off the GDP of Mexico and Canada, and 0.32 per cent off that of the USA. Jobs would be lost. Wages would fall.

“Based on 2024 job data, this is equivalent to over 177,000 job losses from the 25 per cent tariff, rising to over 400,000 job losses in the event Canada and Mexico retaliate,” Brookings said.

GREATER RISK

Mr Trump was not unmindful of this analysis when, in announcing the proposed tariffs, he warned that there would possibly be “some pain” for Americans from the impositions, but that the hurt would be greater for Mexico and Canada, in whose economies trade accounted for 73 per cent and 67 per cent, respectively, of GDP. In the US, trade is 24 per cent of economic activity.

Mr Trump’s delay, therefore, is unlikely to have been only because of the accommodation reached with Mr Trudeau and Ms Sheinbaum. The interests of his voters were also at stake.

CARICOM does not enjoy similar leverage. But it is clear that its members are at greater risk standing singularly.

There is even better insulation in a broader coalition. In that regard, the region must move urgently to deepen its evolving partnership with the African Union, whose members share many of the concerns – such as for climate change and need for a reformed global rules-based architecture – of the countries of this region.

CARICOM also has to leverage its relationship with the Organisation of African, Caribbean and Pacific States (OACPS), a group that has been attempting to expand intra- and inter-group partnerships on trade, climate change and economic development.

With the global uncertainties, it is critical that Jamaica urgently mends its relationship with the OACPS and return to the fold.