Home Latest Insights | News Tariff War Begins: Trump’s Tariffs Trigger Retaliation from Canada, Mexico, and China

Tariff War Begins: Trump’s Tariffs Trigger Retaliation from Canada, Mexico, and China

Tariff War Begins: Trump’s Tariffs Trigger Retaliation from Canada, Mexico, and China
USC experts talk about the importance of U.S.-China trade and how it affects the economy. (Illustration/iStock)

The much-anticipated tariff war has officially begun following U.S. President Donald Trump’s decision to impose steep tariffs on imports from Canada, Mexico, and China.

The new tariffs, which came into effect overnight, include a 25% levy on products from Canada and Mexico, a 10% tariff on Canadian energy imports, and a 20% tariff on Chinese goods—doubling the previous rate. The move has sparked immediate retaliatory measures from the affected countries, raising concerns about global trade stability and the potential for widespread economic repercussions.

The Beginning of the Tariff War

President Trump has framed the tariffs as a strategy to protect American jobs and manufacturing while also addressing illegal migration and drug trafficking. However, the decision to target the United States’ top trading partners—Canada, Mexico, and China—has led to a tit-for-tat escalation, with experts warning of a broader trade war.

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Tariffs serve as a tax on imports, intended to shield domestic industries from cheaper foreign competition. But economists believe that such measures often lead to higher consumer prices and disruptions to supply chains. The new tariffs on Canadian and Mexican imports and increased levies on Chinese goods have already set the stage for retaliatory actions, creating a ripple effect that could hit various sectors of the global economy.

Canada’s Swift and Severe Response

Canadian Prime Minister Justin Trudeau responded quickly, announcing C$155 billion (US$107 billion) worth of tariffs on American goods. The tariffs will be implemented in two phases: an immediate 25% tariff on C$30 billion worth of goods, followed by additional tariffs on C$125 billion worth of American products within 21 days.

Trudeau condemned Trump’s tariffs, saying, “There was no justification” for the move, particularly since less than 1% of the fentanyl intercepted at the U.S. border originated from Canada. This rebuttal came as Trump cited drug trafficking, including fentanyl, as part of his rationale for the tariffs.

The tariffs’ potential impact on Canada’s economy is significant. The automotive sector, a vital part of Canada’s economy, could be severely disrupted. Car parts often cross the U.S.-Canada border multiple times during manufacturing, which means they might be taxed repeatedly, raising costs and potentially leading to job losses.

Canada’s provincial leaders have also hinted at drastic measures. Ontario Premier Doug Ford suggested cutting off Canadian electricity supplies to the U.S., emphasizing that Canada provides enough energy to power six million American homes.

“If they want to try to annihilate Ontario, I will do anything, including cutting off their energy, with a smile on my face,” Ford told NBC.

The Canadian Chamber of Commerce called the tariffs “reckless,” warning they could lead to a “recession, job losses, and economic disaster” on both sides of the border.

Mexico Holds Its Fire—For Now

Mexican President Claudia Sheinbaum echoed Trudeau’s sentiments, stating there was “no motive, no reason, no justification” for Trump’s actions. However, unlike Canada, Mexico has opted for a more measured approach, delaying the announcement of specific retaliatory tariffs until Sunday.

Sheinbaum’s stance indicates a potential window for de-escalation, but she made it clear that Mexico is prepared to respond if necessary. Her administration has previously demonstrated its capacity to combat drug trafficking, recently seizing over a ton of fentanyl and dismantling 329 methamphetamine labs. Sheinbaum emphasized that Mexico had already taken steps to curb the flow of illegal drugs into the U.S.

Despite this restraint, the Mexican government has been clear that it will not allow its economy to be targeted without a response. The delay in announcing tariffs could be a strategic move, allowing for last-minute negotiations or a show of good faith to avoid a full-blown trade war.

China’s Counterpunch

China, which now faces 20% tariffs on its goods entering the U.S., has wasted no time in retaliating. Beijing announced new tariffs of up to 15% on key American exports, including agricultural products such as chicken, pork, soy, and beef. China has also imposed additional export controls on 15 American companies, including defense contractors like Leidos and General Dynamics Land Systems.

The spokesperson for China’s National People’s Congress, Lou Qinjian, reinforced China’s unwillingness to be bullied: “China will not accept pressuring or threatening,” he said.

China’s Ministry of Commerce described the U.S. tariffs as harmful to trade relations and urged their withdrawal, underlining a tough stance against what it perceives as economic aggression.

The Chinese tariffs, set to take effect on March 10, could significantly impact U.S. agriculture. American exports of corn and soybeans, which represent a substantial share of trade with China, will now face heightened duties of 15% and 10%, respectively. This move could hit U.S. farmers hard, particularly as China is one of the largest markets for American agricultural goods.

The tariff war marks a significant escalation in global trade tensions. As Canada, Mexico, and China hit back with their own tariffs, the risk of prolonged economic conflict becomes more realistic. While Trump maintains that tariffs are a tool to protect American interests, economists warn that these measures could lead to widespread economic pain.

The coming weeks will be crucial in determining whether this tariff war can be contained or if it will spiral into a broader economic confrontation. With Canada and Mexico already taking steps and China demonstrating its resolve, the international community is bracing for the impact of what could be one of the most disruptive trade conflicts in recent history.

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