Trade war erupts between US and Mexico, Canada, China
US President Donald Trump on Saturday ordered sweeping tariffs on goods from China, Mexico and Canada which retaliated against imports from the United States.
Trump slapped tariffs demanding they stop the flow of fentanyl—and illegal immigrants in the case of Canada and Mexico—into the United States.
Trump imposed 25 percent tariffs on Mexican and most Canadian imports and 10 percent on goods from China, starting on Tuesday.
He vowed to keep the duties in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration to the US ends.
Canadian Prime Minister Justin Trudeau said Canada would respond with 25 percent tariffs against $155 billion of US goods, including beer, wine, lumber and appliances, beginning with $30 billion taking effect on Tuesday and $125 billion 21 days later.
Trudeau warned US citizens that Trump’s tariffs would raise their grocery and gasoline costs, potentially shutting down auto assembly plants and limiting supplies of goods such as nickel, potash, uranium, steel and aluminum. He urged his own citizens to forgo travel to the US and to boycott US products.
Mexican retaliation
Mexican President Claudia Sheinbaum, in a post on X, said she was instructing her economy minister to implement retaliatory tariffs but gave no details.
Canada and Mexico said they were working together to face Trump’s tariffs.
China’s Commerce Ministry did not specify its planned countermeasures. Its statement left open the door for talks between Washington and Beijing.
“Fentanyl is America’s problem,” China’s foreign ministry said.
At nearly $100 billion in 2023, imports of crude oil accounted for roughly a quarter of all US imports from Canada, according to US Census Bureau data.
Automakers would be particularly hard hit, with new steep tariffs on vehicles built in Canada and Mexico burdening a vast regional supply chain.
The tariff announcement makes good Trump’s repeated threat during the 2024 presidential campaign.
Republicans welcomed the news, while industry groups and Democrats issued stark warnings about the impact on prices.
National Foreign Trade Council President Jake Colvin said Trump’s move threatened to raise the costs of “everything from avocados to automobiles” and urged the US, Canada and Mexico to find a quick solution to avoid escalation.
Outrage
Provincial officials and business executives in Canada also reacted with outrage, calling for forceful tariffs on imports from the US.
US tariff collections are set to begin at 12:01 a.m. EST on Tuesday, according to Trump’s order.
Trump declared the national emergency under the International Emergency Economic Powers Act and the National Emergencies Act to back the tariffs, which allow the president powers to impose sanctions to address crises.
White House officials said there would be no exclusions from the tariffs and if Canada, Mexico or China retaliated against American exports, Trump would likely increase the US duties.
The White House officials said that Canada specifically would no longer be allowed the “de minimis” US duty exemption for shipments under $800. The officials said Canada, along with Mexico, has become a conduit for shipments of fentanyl and its precursor chemicals into the US via small packages not often inspected by customs.
A model gauging the economic impact of Trump’s tariff plan suggests it would reduce US growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home.
