US President Donald Trump has mandated a 25% tariff on imports from Canada and Mexico, and a 10% tariff on goods from China starting Tuesday. This move poses the risk of igniting a new trade war, which economists warn could hinder global growth and renew inflationary pressures.
Following an extended golf session in Florida, Mr. Trump signed three separate executive orders implementing the tariffs. He stated that these duties will remain until what he referred to as the national emergency concerning fentanyl trafficking and illegal immigration to the US is resolved.
In response to worries expressed by oil refiners and states in the Midwest, Mr. Trump set a 10% duty on energy products from Canada, whereas Mexican energy imports are subject to the full 25% tariff.
According to data from the US Census Bureau, crude oil imports, totaling nearly $100 billion in 2023, constituted about a quarter of all US imports from Canada.
Canada’s Prime Minister Justin Trudeau announced that the country would retaliate against Mr. Trump’s tariffs.
The actions taken by the US prompted immediate promises of retaliation from both Canada and Mexico, with no early responses from China.
A fact sheet from the White House indicated that the tariffs would remain until “the crisis is alleviated,” but did not provide specific details on what would be required from the three countries to lift the measures.
This tariff announcement aligns with Trump’s ongoing threats made during the 2024 presidential campaign and since taking office. Despite warnings from leading economists about the erosion of US and global growth and potential price increases for consumers and businesses, Trump proceeded with the tariffs.
While Republicans welcomed the announcement, industry groups and Democrats warned of dire consequences for pricing.
Jake Colvin, President of the National Foreign Trade Council (NFTC), stated that Mr. Trump’s decision risks inflating costs on “everything from avocados to automobiles,” urging US, Canada, and Mexico to collaboratively seek a prompt resolution to avoid further escalation.
“We should focus on collaborating with Canada and Mexico to enhance our competitive advantage and support American exports to global markets,” Mr. Colvin indicated in a statement.
Business leaders and provincial officials in Canada expressed outrage, calling for vigorous tariffs on US imports, while senior officials from both Mexico and Canada indicated they would respond with retaliatory measures.
According to Mr. Trump’s written order, tariff collections will commence at 5 am Irish time on Tuesday.
Read more: Trump’s plans for tariffs, tax changes a risk to Irish economy – Central Bank
The Republican administration declared a national emergency under the International Emergency Economic Powers Act and the National Emergencies Act, which grants the president extensive powers to impose sanctions during crises.
Trade attorneys noted that Mr. Trump is once again testing the boundaries of US law, with these two statutes remaining untested in the context of broad tariffs. Legal challenges are expected, according to some experts.
White House officials confirmed there would be no exemptions from the tariffs and indicated that if Canada, Mexico, or China retaliate against American exports, Mr. Trump would likely raise US duties further.
In retaliation against Mr. Trump’s tariffs, Canadian Prime Minister Justin Trudeau announced a 25% tariff on US goods, affecting various products from beverages to appliances.
As relations between the longstanding allies dip to a new low, Mr. Trudeau disclosed at a news conference that he is imposing tariffs on $107 billion worth of US goods.
Mr. Trudeau cautioned that the upcoming weeks will be difficult for Canadians and emphasized that Mr. Trump’s tariffs would negatively impact Americans as well.
Speaking to Americans, he remarked: “They will raise your costs, including food at the grocery store and gas at the pump. They will hinder your access to affordable essential goods.”
The Canadian Prime Minister noted that the tariffs would target American beer, wine, and bourbon, alongside fruits and fruit juices including orange juice from Mr. Trump’s home state of Florida.
Canada will also focus on taxing items such as clothing, sports equipment, and household appliances.
Additionally, the northern neighbor of the US is contemplating non-tariff measures, potentially concerning critical minerals, energy sourcing, and other partnerships, according to Mr. Trudeau.
He also encouraged Canadians to support local products and consider staying in Canada for vacations instead of traveling to the US.
“We did not seek this conflict, but we will stand firm,” Mr. Trudeau asserted.
White House officials have claimed that Canada has become a route for fentanyl shipments entering the US.
Ontario Premier Doug Ford stated in a post on social media that Canada “must respond forcefully.” He reinforced his support for a robust federal response to match US tariffs dollar for dollar.
Nova Scotia’s Premier Tim Houston mentioned he has directed that all alcohol imports from the US be removed from the shelves of provincial stores.
According to White House officials, Canada will not enjoy the “de minimis” US duty exemption for small shipments below $800.
They stated that Canada, along with Mexico, has become a route for fentanyl and its precursor chemicals entering the US through small packages that customs agents rarely inspect.
Mexico’s President Claudia Sheinbaum strongly refuted allegations from Mr. Trump’s administration claiming her government has a partnership with drug cartels.
Sheinbaum mentioned that she instructed her economy minister to implement a Plan B that includes tariff and non-tariff measures to protect Mexico’s interests.
She vehemently denied the claims of her government’s alleged “intolerable alliance” with drug trafficking organizations.
“We categorically reject the slander made by the White House against the Mexican government regarding alliances with criminal groups,” Ms. Sheinbaum posted on the social media platform X.
Analysts suggested that the tariffs imposed by Mexico’s largest trade partner would significantly harm Latin America’s second-largest economy.
Last year, the United States accounted for over 80% of Mexico’s exports, according to official statistics.
In a discussion about the tariffs, Mr. Trump acknowledged that they might cause difficulties for Americans but was not scheduled to address reporters on the topic.
The Republican president claimed that he was leveraging the tariffs to tackle the flow of fentanyl and precursor chemicals from China into the US via Mexico and Canada, as well as to curb illegal immigration into the US.
This initiative was driven by Deputy Chief of Staff Stephen Miller, a staunch advocate for strict immigration policies, alongside Mr. Trump’s newly appointed nominee for head of the Commerce Department, Howard Lutnick, who accompanied the president to Florida.
Mr. Trump returned to his Mar-a-Lago estate in Florida for the weekend.
Less than two weeks into his second term, Mr. Trump is reshaping the conventional governance norms of the United States and its relations with neighboring countries and the broader world.
An economic model assessing the potential impact of Trump’s tariff strategy, developed by EY Chief Economist Greg Daco, indicates it could reduce US growth by 1.5 percentage points this year, push Canada and Mexico into recession, and lead to “stagflation” domestically.
“Substantial tariff increases against US trading partners could create a stagflationary shock—combining a negative economic impact with an inflationary surge—while also generating financial market volatility,” Mr. Daco wrote.
This volatility was evident earlier in the week when both the Mexican peso and Canadian dollar plummeted after Trump reaffirmed his threats, causing US stock prices to drop and Treasury bond yields to rise.
