New Trump tariffs stoke wind and solar fears

UPDATED: US President Donald Trump as promised took punitive trade action against Canada and Mexico, dishing another dose of uncertainty for clean energy investors already reeling from his policy dictates since taking office.

In an announcement over the weekend Canada and Mexico were each hit with 25% tariffs, with the exception of a lower 10% on Canadian "energy resources", with China subject to 10% in addition to existing tariffs.

The new measures are due to take effect from 4 February.

Universal tariffs would deal a blow to US battery, solar, and wind industries, already out of favour with Trump, as they employ aluminum, components, critical materials, other metals, and steel imported from both countries.

US business groups and their counterparts on both sides of the border have been lobbying against imposition of universal tariffs, arguing such a move would be inflationary, disrupt North American supply chains, and undermine administration efforts to lessen trade dependence on China.

During Trump’s first term, the three countries formed the United States-Mexico-Canada Agreement (USMCA), which entered into force on 1 July 2020.

This replaced the North America Free Trade Agreement (NAFTA), with Trump claiming the new trade agreement was more beneficial for US economic interests. He now asserts the US can obtain even a better deal.

Trump campaigned on a promise to use the threat of tariffs as both a weapon to wring concessions from a long list of countries he perceives as treating the US unfairly on trade matters and pressuring them to comply with his domestic priorities.

Those that relate to Canada and Mexico include his demands that they toughen actions on their borders to curb drug trafficking and illegal migration.

In Mexico’s case, to also prevent China from setting up factories that produce cheap automobiles that Trump asserts would unfairly compete with those made in the US by entering tariff free across the border.

While both Canada and Mexico have moved or pledged to address some of Trump’s concerns, officials have also publicly stated they will defend their countries interests. He has been particularly irritating for some Canadian officials.

On Thursday, Trump asserted, “Canada and Mexico have never been good to us on trade.” He also claimed, “They’ve treated us very unfairly on trade and we’ll be able to make that up very quickly because we don’t need the products they have.”

Ontario Premier Doug Ford criticised Trump’s comments, asserting in a post on X that he is “hellbent on undermining Canada.”

“The federal government needs to be ready to immediately implement a strong and forceful response. Dollar for dollar. Tariff for tariff. Canada won’t start this fight, but we have to be ready to win it.”

Note: this is an updated version of an earlier article