U.S. President Donald Trump has signed decrees imposing tariffs on imports from Mexico, Canada, and China, raising fears of a trade war that could hinder global economic growth. In retaliation, Canada plans to levy tariffs on $155 billion worth of American goods, while Mexico is preparing its own measures. China intends to challenge the tariffs at the WTO. The tariffs, effective Tuesday, target energy products and various imports, with no exemptions and potential further U.S. tariffs if retaliatory actions occur.
Trump’s Tariff Decrees Ignite Trade Tensions
On Saturday, U.S. President Donald Trump took decisive action by signing decrees that impose tariffs on imports from Mexico, Canada, and China. This move has sparked concerns about a potential trade war that could negatively impact global economic growth and lead to increased inflation rates.
Retaliation from North American Neighbors
In immediate response, both Mexico and Canada have vowed to retaliate by implementing their own tariffs. Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum engaged in discussions over the phone on Sunday, reaffirming their commitment to collaborating and enhancing bilateral relations as signatories of the North American Free Trade Agreement (NAFTA), as reported by Trudeau’s office.
China has also announced its intention to contest Trump’s tariffs at the World Trade Organization (WTO), alongside other potential countermeasures. The decrees, set to take effect on Tuesday, will impose a 25% tariff on most imports from Mexico and Canada, and a 10% tariff on goods from China.
Trump has indicated that these tariffs will remain in place until the national emergency concerning fentanyl and illegal immigration is resolved, although specifics on what conditions might lift the tariffs have not been disclosed.
Amidst concerns from oil refiners and Midwestern states, the Republican president has opted to impose a 10% tariff on Canadian energy products, while Mexican energy imports are facing a steeper 25% tariff.
In retaliation, Trudeau announced that Canada plans to impose a 25% tariff on approximately CAD 155 billion worth of American goods, which includes items like beer, wine, lumber, and household appliances. The initial round of tariffs affecting CAD 30 billion of U.S. goods will take effect soon, with an additional round targeting CAD 125 billion set to follow in 21 days.
Mexican President Sheinbaum has instructed her Minister of Economy to prepare retaliatory measures, although details remain undisclosed. Meanwhile, the Chinese Ministry of Commerce has yet to clarify the specific countermeasures it may pursue, expressing a desire for constructive dialogue with the U.S.
According to a fact sheet from the White House, these tariffs will remain in force “until the crisis subsides,” but no criteria have been specified for relief from these measures.
Oil imports from Canada represented about a quarter of all U.S. imports, totaling nearly USD 100 billion in 2023, according to U.S. Census Bureau data. The automotive industry is expected to be particularly hard-hit, as the new tariffs will complicate supply chains for vehicles manufactured in Mexico and Canada.
This decision follows Trump’s ongoing threats against Mexico and Canada concerning their efforts to manage the flow of fentanyl and migrants since his return to the White House. While Republicans have largely praised the decision, industry groups and Democrats have raised alarms over the potential rise in consumer prices.
Jake Colvin, president of the National Foreign Trade Council, cautioned that Trump’s tariffs could lead to increased costs for a wide array of products, from avocados to automobiles, stressing the urgency for the U.S., Canada, and Mexico to reach a swift resolution to prevent further escalation.
The tariffs are scheduled to come into force at 12:01 AM (5:01 AM GMT) on Tuesday, with White House officials confirming that there will be no exemptions. They also warned that any retaliatory measures from Canada, Mexico, or China could result in additional U.S. tariffs.