Trump’s new tariffs on China, Canada, and Mexico ignited a global trade war. Beijing, Ottawa, and Mexico City strike back with retaliatory tariffs, impacting US businesses and markets. Experts warned of rising prices, supply chain disruptions, and economic turmoil.
President Donald Trump on Tuesday ratcheted up trade tensions by slapping new tariffs on Mexico, Canada, and China, prompting immediate retaliatory actions from America’s largest trading partners. The action plunged financial markets into chaos, as companies prepared for economic uncertainty and possible inflationary pressure.
US slaps tariffs on key imports
In the early hours of yesterday, America imposed a 25 per cent tax on Mexican and Canadian imports, with Canadian oil products subject to a lower tariff of 10 per cent. Trump at the same time doubled last month’s tariff of 10 per cent on Chinese exports to 20 per cent, further straining relations with Beijing.
In a combative White House statement, Trump justified the action, declaring tariffs “a very powerful weapon that politicians haven’t used because they were either dishonest, stupid, or paid off in some other form.”
China, Canada, and Mexico strike back
China retaliates with tariffs on US exports
Beijing retaliated in short order, slapping tariffs of up to 15 per cent on various U.S. agricultural exports. China also lengthened its list of US firms to which export controls apply, raising economic pressure against American firms.
Canada strikes back with tariffs on USD 100 billion of US goods
Canadian Prime Minister Justin Trudeau declared retaliatory tariffs against more than USD 100 billion worth of US products, saying that “our tariffs will remain in place until the U.S. trade action is withdrawn.” Canada’s retaliations take the form of an immediate tariff of 25 per cent on USD 21 billion in American goods and additional tariffs released over the following three weeks.
Nova Scotia Premier Tim Houston went further, ordering US liquor removed from provincial liquor stores and doubling commercial US vehicle toll fees.
Mexico considers tariffs, seeks last-minute de-escalation
Mexican President Claudia Sheinbaum said Mexico would impose retaliatory tariffs of its own, the specifics to be announced at a public event in Mexico City. The delay is a sign of Mexico’s expectation of a last-minute de-escalation of the trade war.
Impact on US economy and markets
The economic consequences of Trump’s tariffs will be considerable. The tariff increases constitute a USD 1.4 to USD 1.5 trillion tax burden over ten years, in disproportionate impact on lower-income earners.
Financial markets were negative in response, with US equities sharply declining after Trump stated there was “no room left” for negotiations.
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