Trump Imposes Tariffs on Canada, Mexico, and China, Prompting Retaliation

US President Donald Trump has announced sweeping new tariffs on imports from China, Mexico, and Canada, sparking strong reactions from all three countries. The new measures include a 25% tariff on Canadian and Mexican goods and an additional 10% on Chinese imports, with Canadian energy facing a lower 10% duty. Trump cited illegal immigration and drug trafficking as key reasons for the move, stating that the tariffs aim to hold these nations accountable.

In response, both Canada and Mexico have vowed to retaliate. Mexican President Claudia Sheinbaum rejected accusations that her government collaborates with drug cartels, calling them "slander." She argued that tariffs are not a solution and insisted that dialogue is necessary to address issues between the two countries. Sheinbaum has instructed her economy minister to implement countermeasures, including a 25% tariff on American goods.

Canadian Prime Minister Justin Trudeau also condemned the tariffs, emphasizing that his government would not back down. Canada plans to impose 25% tariffs on $155 billion worth of U.S. goods, with $30 billion taking effect immediately and the remainder within 21 days. Targeted products include beer, wine, bourbon, fruits, vegetables, perfumes, clothing, shoes, household appliances, sporting goods, and furniture. Additionally, Canada is considering non-tariff measures related to critical minerals and procurement. Trudeau dismissed the notion that Canada poses a security threat to the U.S., noting that less than 1% of fentanyl entering the U.S. originates from Canada. He also revealed that his government had pledged $900 million in border security measures in an effort to avoid the tariffs but stressed that such duties are not the right approach.

Meanwhile, China strongly opposed the tariffs, stating it would take countermeasures and file a complaint with the World Trade Organization. The 10% tax on Chinese goods will be added on top of existing tariffs imposed during Trump's first term and under President Joe Biden. Chinese Vice-Premier Ding Xuexiang recently signaled Beijing’s interest in resolving trade tensions and expanding imports but emphasized that his country would defend its economic interests.

The tariffs are expected to have significant economic consequences. China, Mexico, and Canada account for more than 40% of total U.S. imports. Experts warn that the trade measures could increase prices for a wide range of goods, including cars, lumber, steel, frozen foods, and alcohol. The auto industry, in particular, could be hard hit, as auto parts frequently cross borders before final assembly. Analysts estimate that the average price of a U.S. car could rise by approximately $3,000.

A report by the Peterson Institute for International Economics warned that 25% tariffs on Canada and Mexico could slow economic growth and fuel inflation in all three countries. U.S. industry groups have also voiced concern. The National Homebuilders Association cautioned that tariffs could raise housing costs, while the Farmers for Free Trade group warned that struggling American farmers would be further impacted. The U.S. Retail Industry Leaders Association, representing companies such as Home Depot, Target, and Walgreens, expressed hope that the tariffs could still be avoided.

Trump justified the move under the International Emergency Economic Powers Act, arguing that the three countries had failed to curb the flow of drugs into the U.S. The White House accused Mexico of working with drug cartels and said Canada had not cooperated sufficiently on border security and drug enforcement. It also pointed to China's role in the fentanyl crisis, stating that Beijing’s exports of the synthetic opioid contribute significantly to the issue.

According to official data, drug seizures at the U.S.-Mexico border far exceed those at the northern border. Between October 2023 and September 2024, U.S. border agents seized over 21,000 pounds (9,525 kg) of fentanyl at the southern border, compared to just 43 pounds (19.5 kg) at the northern border. However, Canadian intelligence reports have suggested that an increasing number of organized crime groups are manufacturing drugs within Canada.

Ashley Davis, a Republican business lobbyist involved in discussions on tariffs, told the BBC that Trump could roll back some of the tariffs on Canada and Mexico if progress is made on immigration enforcement. She emphasized that border security and trade with China were key issues for American voters in the last election, suggesting that Trump is keen to secure policy victories in these areas.

Despite widespread criticism from economic experts and industry leaders, Trump acknowledged that the tariffs could cause "temporary, short-term disruption" but insisted they were necessary to protect American interests. The Canadian Chamber of Commerce warned that the measures would have "immediate and direct consequences" for both American and Canadian workers and significantly increase costs across multiple sectors.

Sources:

• BBC
• Reuters