Trump Imposes Tariffs as Canada and Mexico Retaliate

Trade tensions escalate as former U.S. President Donald Trump enforces new tariffs, prompting swift retaliatory measures from Canada and Mexico.

US President Donald Trump has declared extensive new tariffs on all goods imported from the United States’ three largest trading partners: China, Mexico, and Canada.

Trump announced that starting Tuesday, the US will implement tariffs of 25% on Canada and Mexico, while China will face a 10% tariff. Canadian energy products are subject to a reduced tariff rate of 10%.

He had warned that he would enforce import taxes if the three countries failed to address his concerns regarding illegal immigration and drug trafficking.

Both Canada and Mexico announced they are preparing to impose their own retaliatory tariffs.

Trump has suggested he is prepared to increase the duties if the countries decide to retaliate.

China, Mexico, and Canada collectively comprised over 40% of imports to the US last year.

“The White House announced on Saturday via a statement on X that the newly introduced tariffs are essential to ensure China, Mexico, and Canada fulfill their commitments to stop the influx of dangerous drugs into the United States.”

Trump announced on his Truth Social platform: “This action was taken under the International Emergency Economic Powers Act (IEEPA) due to the significant threat posed by illegal aliens and lethal drugs, including fentanyl, endangering our citizens.”

A tariff is a domestic tax imposed on goods when they enter the country, based on their value. Tariffs are a key component of Trump’s economic strategy.

He views them as a means to boost the US economy, safeguard jobs, increase tax revenue, and in this instance, advocate for policy action from allies.

In her response, Mexican President Claudia Sheinbaum described the accusations of the Mexican government having alliances with criminal organizations as “slander.”

In its announcement, the White House accused Mexico’s government of maintaining “an intolerable alliance” with Mexican drug trafficking organizations.

In a statement, Sheinbaum urged the United States to intensify efforts to curb the illegal flow of firearms heading south that arm cartels.

She stated that her country is open to collaborating with the US. “Issues are resolved through dialogue, not by imposing tariffs,” she said.

She has directed her economic minister to implement tariff and non-tariff responses, which are anticipated to involve imposing retaliatory tariffs of 25% on American products.

Canadian Prime Minister Justin Trudeau announced that his country will likewise take action.

“We don’t want to be in this situation, it wasn’t our choice,” he stated during a press conference late Saturday.

“However, we will remain steadfast in advocating for Canadians.”

His government plans to implement 25% tariffs on $155 billion worth of American goods, with $30 billion taking effect on Tuesday and an additional $125 billion following in 21 days.

The targeted items consist of American beer, wine, bourbon, fruits and fruit juices, vegetables, perfumes, clothing and shoes. In addition to these goods are household appliances, sporting equipment and furniture. Lumber and plastics will be subject to levies as well.

Trudeau mentioned that non-tariff measures under consideration involve critical minerals and procurement, but he did not provide further details.

The prime minister rejected the idea that the shared border is a security issue, asserting that less than 1% of fentanyl entering the United States originates from Canada.

In an effort to completely bypass the tariffs, Ottawa pledged to introduce C$1.3 billion ($900 million; £700 million) worth of new security measures along its border with the United States.

“Using tariffs is not the most effective method for us to collaborate on saving lives,” Trudeau stated.

He also mentioned that he hadn’t communicated with Trump since the inauguration but would maintain open lines of communication with his US counterparts.

China expressed strong dissatisfaction and “firmly opposes” the levies in a statement.

The statement also mentioned that a lawsuit would be filed with the World Trade Organization against the US for its “unjust actions” and affirmed plans to take countermeasures to “protect its own rights and interests.”

China’s Vice-Premier Ding Xuexiang stated at the World Economic Forum in Davos, Switzerland, last month that China seeks a “win-win” resolution to trade tensions and aims to increase its imports.

The economies of Canada, Mexico, and the United States are highly interconnected, with approximately $2 billion (£1.6 billion) worth of manufactured goods crossing their borders each day.

According to economists, the tariffs and ensuing retaliation might lead to price increases across a broad spectrum of products. This could include items such as cars, lumber, steel, various foods like frozen French fries, avocados and tomatoes, as well as alcohol.

The automotive industry might be particularly affected. Auto parts typically cross the three borders several times before a vehicle is fully assembled, and TD Economics indicates that this could lead to an average increase of approximately $3,000 in the price of cars in the United States.

A report from January by the Peterson Institute for International Economics indicated that implementing a blanket 25% tariff on Canada and Mexico would impede growth and increase inflation across all three countries.

On Friday, Trump admitted that the tariffs might cause “some temporary, short-term disruption.”

The Canadian Chamber of Commerce issued a statement indicating that tariffs will have “immediate and direct effects on the livelihoods of Canadians and Americans” and will cause “a significant rise in costs for everyone.”