U.S. President Donald Trump imposed a 25% tariff on imports from Mexico and Canada on Tuesday. He also doubled duties on Chinese goods to 20%, triggering trade disputes with the U.S.’s top three trading partners.
The tariffs, affecting nearly $2.2 trillion in annual U.S. trade, took effect at 12:01 a.m. EST (0501 GMT). Hours earlier, Trump accused all three countries of failing to curb the flow of fentanyl opioids and their precursor chemicals into the U.S.
China responded immediately, announcing new tariffs of 10%-15% on select U.S. imports starting March 10. Beijing also introduced export restrictions targeting specific U.S. entities.
Canada and Mexico, longtime tariff-free trade partners with the U.S., prepared to retaliate.
Canadian Prime Minister Justin Trudeau said Ottawa would impose immediate 25% tariffs on C$30 billion ($20.7 billion) of U.S. imports. If Trump’s tariffs remained in place for 21 days, Canada would expand duties to C$125 billion ($86.2 billion). He confirmed that beer, wine, bourbon, home appliances, and Florida orange juice would be among the targeted goods.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said. He argued that the move violated the U.S.-Mexico-Canada free trade agreement signed during Trump’s first term.
Ontario Premier Doug Ford told NBC he was prepared to halt nickel shipments and electricity exports to the U.S. in retaliation.
Meanwhile, Mexico’s economy ministry said President Claudia Sheinbaum would announce Mexico’s response in a Tuesday morning press conference.
China Tariffs Escalate
Trump’s latest 10% tariff on Chinese goods builds on the 10% duty he imposed on February 4, citing Beijing’s role in the fentanyl crisis. The cumulative 20% duty applies on top of the 25% tariffs he levied in his first term on $370 billion worth of U.S. imports.
Under former President Joe Biden, U.S. tariffs on China surged last year. Duties on Chinese semiconductors doubled to 50%, while tariffs on Chinese electric vehicles quadrupled to over 100%.
Trump’s new 20% tariff will now hit previously untouched Chinese consumer electronics, including smartphones, laptops, video game consoles, smartwatches, and Bluetooth devices.
China retaliated with new tariffs on U.S. agricultural products, affecting meats, grains, cotton, fruits, vegetables, and dairy.
Additionally, Beijing restricted 25 U.S. firms from exporting or investing, citing national security concerns. Ten of these firms faced penalties for selling arms to Taiwan.
China’s commerce ministry condemned the U.S. tariffs. It argued that they violated WTO rules and “undermine the basis for economic and trade cooperation between China and the U.S.”
Economic Fallout and Recession Fears
Trump’s first-term trade wars cost U.S. farmers approximately $27 billion in lost exports, allowing Brazil to gain a larger share of the Chinese market.
Experts fear the new tariffs on Mexico and Canada could have an even greater impact on North America’s integrated economy. The new duties threaten industries reliant on cross-border supply chains, including automotive manufacturing, energy refining, and agricultural processing.
“Today’s reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses, and economic disaster,” said Candace Laing, CEO of the Canadian Chamber of Commerce.
She warned that tariffs would raise costs for consumers, disrupt supply chains, and fail to create the “golden age” Trump envisioned.
Matt Blunt, president of the American Automotive Policy Council, urged Trump to exempt vehicles that meet U.S.-Mexico-Canada Agreement (USMCA) content requirements from the tariffs.
Financial markets reacted negatively to Trump’s tariff announcement. Global stocks tumbled, safe-haven bonds rallied, and both the Canadian dollar and Mexican peso weakened against the U.S. dollar.
More Tariffs on the Horizon
Since taking office in January, Trump has aggressively expanded tariffs. He fully restored 25% duties on steel and aluminum imports, effective March 12, revoking prior exemptions.
His “America First” trade agenda remains central to his economic policy. He plans to highlight these trade moves in a Tuesday night address to Congress.
On Saturday, Trump launched a national security investigation into lumber and wood imports. This could result in steep tariffs, particularly impacting Canada, which already faces 14.5% U.S. duties on softwood lumber.
The previous week, Trump reopened a probe into digital services taxes and proposed fees of up to $1.5 million per Chinese-built ship entering U.S. ports. He also began a tariff investigation into copper imports.
Additionally, he aims to impose “reciprocal tariffs” to match other countries’ levies and offset their trade barriers—a move that could significantly impact the European Union.
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