Russia can only benefit from US trade wars with China, Mexico, and Canada

As of March 4, the United States has imposed 10–25% tariffs on exports from China, Canada, and Mexico. President Donald Trump justified these measures by claiming that all three countries "have not taken sufficient action to stop the flow of fentanyl and its precursors into the U.S."

Photo: unsplash.com by chuttersnap, https://creativecommons.org/public-domain/pdm/

Logistics

American importers may choose to completely halt imports from these nations, which could put businesses in a difficult position and push their economies into recession – especially in cases of Canada and Mexico. Since Canada is one of the leading arms suppliers to Ukraine, any economic troubles it faces could limit its ability to continue military aid to Kyiv.

Prime Minister Justin Trudeau has announced retaliatory 25% tariffs on $275 billion worth of American goods within 21 days. However, finding alternatives to U.S. products will be challenging due to logistical difficulties, likely forcing Canada to absorb the cost increases. Additionally, discussions have emerged about banning Canadian nickel exports to the U.S., which currently account for 50% of America’s nickel imports. This, in turn, could benefit Russia’s Norilsk Nickel.

Amid the ongoing trade conflicts, Washington might begin lifting sanctions on Russian metals and energy resources to compensate for lost supplies.

Chinese Importers May Turn to Russia for Goods

China has responded to U.S. tariffs by imposing 10–15% duties on American imports, including poultry, wheat, corn, cotton, sorghum, soybeans, pork, beef, fruits, vegetables, and dairy products. These products were previously covered by a trade agreement made during Trump’s first term, in which China pledged to maintain imports in exchange for the U.S. refraining from new tariffs.

Now, Chinese importers will be seeking alternative suppliers. During the first U.S.-China trade war, China successfully replaced American oil and agricultural imports with Russian alternatives. Russian companies are expected to seize this opportunity by offering competitive deals, particularly in wheat, poultry, vegetables, dairy, and pork.

U.S. Weapons Intended for Ukraine May Be Redirected to Mexico

Regarding Mexico, President Claudia Sheinbaum has instructed her economy minister to introduce countermeasures, including tariffs on American goods such as oil, gas, machinery, equipment, and agricultural products. However, Mexico is less likely to escalate the trade dispute symmetrically, as doing so could be dangerous. If Mexico pushes too hard, it could provoke a U.S. military operation against its drug cartels.

The Pentagon has recently deployed 5,000 additional troops to defend the U.S. southern border and has issued strong statements about potential action. This suggests that funds, weapons, and armored vehicles initially designated for Ukraine may instead be redirected to a conflict against the cartels in Mexico.

Details

An economic conflict between China and the United States has been ongoing since January 2018, when U.S. president Donald Trump began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are longstanding unfair trade practices and intellectual property theft. The first Trump administration stated that these practices may contribute to the U.S.–China trade deficit, and that the Chinese government requires transfer of American technology to China. In response to US trade measures, the Chinese government accused the Trump administration of engaging in nationalist protectionism and took retaliatory action. After the trade war escalated through 2019, in January 2020 the two sides reached a tense phase-one agreement. By the end of Trump's first presidency, the trade war was widely characterized as a failure for the United States.