The tariffs imposed by US President Donald Trump on Canada and Mexico have sparked panic and rejection from the US’ most important trade partners. They claimed that the tariffs would destroy the North American economy and undermine an 80-year-old pact.
Politicians, business leaders and trade associations in all three countries reacted with disbelief and warned that the tariffs would lead to inflation, disruptions in supply chains and widespread job losses.
On Saturday afternoon, Donald Trump signed an executive order, introducing a 25% tariff on Canadian and Mexican goods and 10% on energy, effective on Tuesday, as well as additional 10% tariffs on Chinese goods.
Mexico’s President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau announced a retaliatory measure, imposing tariffs on US goods. The new trade barriers would slow down growth and accelerate inflation in all three countries, with Mexico and Canada being the most affected, according to economists at the Peterson Institute for International Economics.
The tariffs will also upend the decades-long deepening of integration in North America. Mexico and Canada export more than three-quarters of their goods to the US, supported by a trilateral trade agreement (USMCA) signed during Trump’s presidency.
US companies operating across the region will be affected. The US Chamber of Commerce stated that the tariffs would disrupt supply chains.
Leading representatives of Mexico’s private sector reported that after Trump’s announcement, panic and deep nervousness prevailed. Many had hoped that the country would benefit from a second Trump term, but few believed he would follow through on his threats. Pedro Casas Alatriste, Director of the American Chamber of Commerce in Mexico, said the tariffs were a step back for a relationship built over decades.
Since Trump’s election and the announcement of tariffs in November, Canadian and Mexican delegations have failed to convince the president that such measures would also harm the US economy.