SerpApi.Org
Just as inflation was beginning to cool off in the wake of the US and Iran signing their memorandum of understanding to cease hostilities in mid-June, Americans can once again pay more for essentials from gasoline to food now that the conflict has flared back up again and Donald Trump has announced that he wants to impose a 50 percent tariff on many Canadian goods.
With the Strait of Hormuz, the waterway through which about 20 percent of global oil and liquefied natural gas exports passed before the war, largely closed again, oil prices increased sharply and nearing $90 per barrel. That is almost $20 more than at the start of the month.
In addition, the average gallon of gas in the US once again crossed the $4 threshold and was up $0.17 from a week ago.
In the midst of that, Trump decided to also reignite his trade war with Canada.
On Monday, the administration announced that he would impose a 50 percent tariff on many Canadian goods in retaliation for what he claims were discriminatory actions targeting American businesses and industries.
Of course, all of this began when the president slapped tariffs on most US trading partners last year. However, since most of them were found to be unconstitutional, Trump is now trying something new. The justification for the new tariffs, which will affect everything from dairy products and plywood to cement and furniture, is Section 338 of the Tariff Act of 1930, a rarely used provision that will undoubtedly be tested in court immediately.
Canada’s Prime Minister Mark Carney pointed out that any of the duties his government imposed on the US were merely a response to the president’s tariffs, which he called a “direct violation” of the free trade agreement between his country, the US, and Mexico. That deal, referred to as CUSMA, was finalized during Trump’s first term. Now, however, the president wants to make some modifications to the trade pact.
Carney said he is open to some changes.
“Recognizing that the US has been transforming all of its trade relationships, including those covered under CUSMA, over the past 18 months, Canada has made a series of detailed and comprehensive proposals to resolve this dispute and to modernize CUSMA,” he stated.
The prime minister also pointed out that, contrary to Trump’s false claims that foreign governments pay for the tariffs, it is largely US consumers who are footing the bill.
“This trade dispute has raised costs for families, particularly in the US,” he noted. “Canada stands ready to engage intensively to address outstanding issues with the US to the mutual benefit of our citizens.”
While many other countries kowtowed to Trump, Canada is an outlier because it has fought back, which never sat well with the president.
“While the Administration continues to secure fair and reciprocal trade deals with our trading partners, Canada, unlike other partners and allies, continues to retaliate against the United States for its efforts to rebalance trade and protect US industry in national-security sensitive sectors,” said US Trade Representative Jamieson Greer in response to the new tariffs, which is one way of complaining against another country not allowing itself to be bullied.
What all of this means is that prices will certainly go right back up again after a brief respite.
And that is bad news for the GOP ahead of the midterms.
The affordability crisis, which Trump promised to fix on the very first day of his second term but exacerbated instead, is one of the top issues on voters’ minds – and Republicans are losing badly on it. The brief ceasefire, which allowed traffic through the Strait of Hormuz to increase and eased the price of gasoline, would have at least allowed them to give Americans the illusion that things were getting better.
However, a prolonged conflict paired with new tariffs will make that almost impossible.
Déjà Vu All Over Again – Tariffs, the Iran War, and $4 Gasoline originally appeared on WhoWhatWhy
