Washington: President Donald Trump has conceded consumers may suffer “pain” from his sweeping tariffs on goods from the US’s three biggest trading partners but insists it will be worth it, while hitting back at criticism from economists and orthodox Republicans.

The trade war came as the new administration and its government efficiency chief Elon Musk launched an extraordinary attack on the US’s main foreign aid agency, USAID, with Musk calling it a “criminal organisation” that “must die”, adding to fears the organisation will be dismantled.

Trump followed through with his threats to impose 25 per cent tariffs on imports from Canada and Mexico and 10 per cent tariffs on goods from China, signing executive orders on Saturday night for taxes that will be paid by US importers from Tuesday.

It sparked immediate retaliation, with Canadian Prime Minister Justin Trudeau ordering 25 per cent tariffs on $CAD155 billion ($170 billion) worth of US imports, including alcohol, fruits and vegetables, perfumes, clothes and shoes. Mexico was also planning “tariff and non-tariff” responses.

While Trump is a long-standing advocate for tariffs, using them as an economic and political tool, he admitted consumers could face higher prices as a result of the escalating trade war.

“This will be the golden age of America,” he posted in all caps on his Truth Social account. “Will there be some pain? Yes, maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid.”

The president also took aim at critiques from orthodox economists, who generally advocate free trade and oppose border taxes. In particular, he attacked the Murdoch-owned, pro-business Wall Street Journal, which carried a blistering editorial at the weekend accusing Trump of starting “the dumbest trade war in history”.

Trump called the newspaper “globalist” and “always wrong”. The White House followed up by highlighting a number of clippings from the past 35 years in which the paper opposed protectionism and backed free trade.

While Trump regularly portrays tariffs as taxes charged to foreign producers, in reality, they are paid by US importers – with the costs often passed on to consumers. Other members of Trump’s cabinet also admitted Americans could face higher prices as a result.

Homeland Security Secretary Kristi Noem sought to blame US trading partners for any increase in the cost of living. “If prices go up, it’s because of other people’s reactions to America’s laws,” she told NBC’s Meet the Press. “Canada can help us, or they can get in the way, and then they’ll face the consequences.”

Trump mused again on Sunday (Monday AEDT) that Canada should become the US’s 51st state, asserting the northern neighbour would “cease to exist as a viable country” without hundreds of billions of dollars worth of trade with the US, which he portrayed as a subsidy.

“We don’t need anything they have,” he said.

But the response from Canada was uncompromising and bipartisan. Conservative Party leader Pierre Poilievre, the man expected to become prime minister when elections are held later this year, gave his full support to the retaliatory measures announced by Trudeau, calling for dollar-for-dollar tariffs that would do the most damage to American companies while protecting Canada’s.

“There is no justification whatsoever for these [Trump’s] tariffs or this treatment,” Poilievre said. “Canada will never be the 51st state.”

Michael R. Strain, director of economic policy studies at the free-market American Enterprise Institute, said Trump had laid bare his deep and long-standing mercantilist views by asserting the US should not import any goods it could make at home.

Contrary to the White House’s claims, Strain said tariffs during Trump’s first term and the ensuing trade war increased consumer prices, reduced employment in manufacturing and failed to reduce the trade deficit. “The second trade war is likely to more severely increase prices and reduce employment and competitiveness.”

Meanwhile, the Associated Press reported the Trump administration had placed two senior officials on leave from USAID after they refused to hand over classified material to inspectors working under the direction of Musk’s so-called Department of Government Efficiency.

DOGE, the brainchild of Musk, is despite its name, not a real government department. It has, however, been granted powers by Trump to embark on a series of drastic cost-cutting recommendations targeting US government.

Amid a freeze on foreign aid that has caused chaos for emergency health clinics and humanitarian programs abroad, USAID’s standalone website abruptly disappeared over the weekend.

On Sunday, Musk made a barrage of posts about USAID on his social media platform X, calling it “a viper’s nest of radical-left Marxists who hate America” and accusing it of funding bioweapon research “including COVID-19” (while the CIA now leans towards the theory the virus leaked from a lab in Wuhan, China, there is no suggestion it was deliberate). “USAID is a criminal organisation,” Musk posted. “Time for it to die.”

Trump issued an executive order on his first day back in the Oval Office initiating a 90-day pause on foreign aid and a review of all spending programs. The order said the US’s foreign aid industry and bureaucracy were “not aligned with American interests and in many cases antithetical to American values”.

Dozens of senior USAID staff have been suspended and Reuters reported hundreds of contractors had been terminated or placed on leave. Democratic senator Chris Coons said Trump “spent two weeks harassing and laying off USAID employees, and now his team is trying to gut the agency altogether”.

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https://www.smh.com.au/world/north-america/trump-says-tariff-pain-for-consumers-will-be-worth-it-for-future-us-greatness-20250203-p5l906.html

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