Trade War Erupts as Canada, and Mexico Retaliate Against Trump’s Tariffs

The economic standoff between the United States and its closest trading partners escalated dramatically on Saturday as Canada and Mexico announced sweeping retaliatory tariffs in response to U.S. President Donald Trump’s new trade restrictions.

The move comes just days after Trump signed an executive order imposing a 25% tariff on Canadian and Mexican imports and an additional 10% tariff on Chinese goods, citing a national emergency related to illegal immigration and drug trafficking, particularly fentanyl.

With the tariffs set to go into effect on Tuesday, Trump’s protectionist policy has already provoked fierce resistance from global partners, raising fears of an international trade war that could exacerbate inflation, slow economic growth, and destabilize financial markets.

Canada Hits Back: ‘We Will Not Back Down’

Canadian Prime Minister Justin Trudeau wasted no time in condemning the White House’s decision, warning that the tariffs would harm workers and businesses on both sides of the border. In response, Canada is imposing reciprocal 25% tariffs on up to $155 billion worth of U.S. imports, including alcohol, fruit, and other key commodities.

“The actions taken today by the White House split us apart instead of bringing us together,” Trudeau said in an impassioned address, expressing the deep sense of betrayal that many Canadians feel. He reminded Americans that Canada has stood by the U.S. in times of crisis, from military engagements in Afghanistan to providing assistance during Hurricane Katrina and California wildfires.

“We were always there standing with you, grieving with you, the American people,” he said.

Despite the strong response, Trudeau stopped short of escalating the conflict further, encouraging Canadians to prioritize domestic products over American goods while maintaining hope for a resolution.

“This is going to have real consequences for people, for workers on both sides of our border,” he cautioned. “We don’t want to be here. We didn’t ask for this. But we will not back down in standing up both for Canadians and for the incredibly successful relationship between Canada and the United States.”

Further fueling the dispute, British Columbia Premier David Eby called for a boycott of American-made liquor, particularly products from Republican-led states, and directed provincial agencies to remove U.S. alcohol brands from government store shelves.

“In response to the American tariffs, I have directed government and crown agencies to exclude U.S. suppliers from any new purchasing or procurement agreements,” Eby said. “It’s just one of the actions we are taking to prioritize Canada first.”

Mexico Rejects U.S. ‘Slander,’ Warns of Economic Fallout

Mexico, which has also been targeted by Trump’s trade barriers, issued an equally defiant response. President Claudia Sheinbaum pushed back against Trump’s justification for the tariffs, calling his claims about Mexican involvement in drug trafficking a slanderous and false narrative.

“We categorically reject the White House’s slander that the Mexican government has alliances with criminal organizations,” Sheinbaum said in a post on X. “As well as any intention of meddling in our territory.”

She also took direct aim at the U.S. government’s failure to address its own drug crisis, particularly the fentanyl epidemic, which Trump cited as justification for the trade restrictions.

“If the United States government and its agencies wanted to address the serious fentanyl consumption in their country, they could fight the sale of drugs on the streets of their major cities, which they don’t do,” she said. “They could also tackle the laundering of drug money, which fuels the very criminal networks they claim to oppose.”

While Sheinbaum acknowledged that Mexico’s economy remains “very strong”, she confirmed that her administration had already ordered retaliatory tariffs and other countermeasures, signaling an escalation of economic tensions between the two nations.

China Joins the Fight, Vows WTO Action

Trump’s tariff policy has also drawn immediate backlash from China, which vowed to take the dispute to the World Trade Organization (WTO) and implement “corresponding countermeasures” to protect its own economy.

“China is strongly dissatisfied and firmly opposes this,” the country’s Commerce Ministry declared in a statement, making it clear that Beijing is prepared to respond forcefully.

With China’s retaliation looming, experts warn that Trump’s trade aggression could ignite a global economic firestorm, leading to further disruptions in supply chains, higher consumer prices, and prolonged economic uncertainty.

A study by the Budget Lab at Yale University estimates that the average U.S. household will lose approximately $1,170 in income due to higher costs of imported goods.

Furthermore, with Canada, Mexico, and China all planning countermeasures, economists predict that the trade war will worsen inflation and slow down economic growth—the very problems Trump had vowed to fix on the campaign trail.

Adding to the controversy, Trump’s executive order extends U.S. import restrictions to shipments valued under $800, eliminating an exemption that previously allowed smaller imports to enter the country without customs duties. According to experts, this change will further strain small businesses and increase costs for American consumers.

What Happens Next?

With Trump pledging to raise tariffs even further if foreign governments retaliate, the prospect of a full-scale trade war now seems more inevitable than avoidable.

With 77% of Canada’s exports and 84% of Mexico’s exports going to the U.S., the United States remains their largest trading partner, and a prolonged trade dispute could have devastating consequences for key industries, including agriculture, manufacturing, and energy.

For American consumers, the fallout will be felt at the checkout line, as higher tariffs translate into more expensive groceries, gas, cars, and everyday goods.

And for the global economy, the uncertainty surrounding Trump’s aggressive trade policies poses a serious risk, threatening to destabilize markets and slow international growth.

Against the backdrop of escalating tension, Trump’s willingness to back down from his protectionist stance remains uncertain. If recent history is any indication, the president may be more inclined to double down—no matter the cost.