Donald Trump set the business and political world alight late on Monday. The incoming president said he would impose a 25% tariff on goods from Mexico and Canada and hit China with more levies on day one of his term. "This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!" he wrote on Truth Social.
Scott Harris has been here before. Eight years ago Catoctin Creek, the Virginia whiskey distillery he runs with his wife, Becky, was generating 11% of its sales in Europe - and expecting to more than double its business there over the next year. Then the trade war kicked in.
After Trump imposed steep tariffs on foreign steel and aluminum, the EU hit back with retaliatory duties, including 25% on American whiskey. "That 11% went to zero," recalled Harris.
While that initial wave of tariffs was repealed, today Catoctin Creek has "no meaningful business" left in Europe, he said. "A few thousand dollars, but nothing to speak of."
Trump's return to power has set the stage for a new trade war. The president-elect campaigned on a pledge to impose sweeping tariffs in an attempt to revitalize the US economy. Officials in key markets are already considering if, and how, they would retaliate. Manufacturers across the US are bracing for disruption - and warn customers could be hit too.
Proponents of tariffs, including Trump and his incoming commerce secretary, Howard Lutnick, have argued they will make America great again by reviving its industrial heartlands and reshoring manufacturing.
Trump and his allies have long argued that tariffs can help to reduce the sizeable US trade deficit, with the value of what it imports from overseas far greater than what it exports to the world.
But while Trump has suggested that "tariff" is "the most beautiful word in the dictionary," many Americans fear they will increase prices, and US firms are worried.
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