By South China Morning Post | Created at 2024-12-10 08:36:32 | Updated at 2024-12-18 04:49:35
1 week ago
The world’s most dynamic economic regions share a common characteristic. Their production networks are integrated beyond national borders. From semiconductor supply chains in East Asia to the automotive production networks spanning North America, the most competitive industries often thrive through cross-border coordination.
North America, one of the world’s most integrated economic networks, is bracing for new pressures as US president-elect Donald Trump threatens tariffs on Canada and Mexico. Canadian Prime Minister Justin Trudeau’s visit to Mar-a-Lago last month might have made Trump reconsider some tariffs. The value of US-Canada trade stood at US$774 billion as of last year.
Similarly, Mexican President Claudia Sheinbaum took a firm stand against the threat of tariffs. US-Mexico trade reached US$798 billion in 2023, making Mexico the top US trading partner. Both Mexico and Canada have surpassed China, whose trade with the US fell about 17 per cent to US$575 billion in 2023.
These massive trade volumes, with millions of trucks crossing borders annually, underscore the potential of trade barriers to cause significant disruptions. Regardless of Trump’s strategic objectives towards Canada and Mexico, any tariffs disrupting North American trade flows would severely damage continental competitiveness, including that of the United States.
North America is a deeply integrated economic region, with production processes zigzagging across borders. The automotive sector exemplifies this integration, with supply chains that link the US to Canada.
While Canada and Mexico will feel the effects of any new trade barriers, US businesses and consumers will also bear steep costs. Using tariffs as leverage against regional partners would fracture these vital production networks, ultimately weakening the US’ own industrial capabilities and global competitive position.
