Trade War Begins as US Imposes Tariffs on Canada and Mexico
After a one-month delay, the anticipated trade war between the US and its North American neighbors has begun. Since Tuesday, the tariffs imposed by US President Donald Trump on goods from Canada and Mexico are in effect. A 10% tariff applies to energy products from Canada, while a 25% tariff is in place for all other goods. Simultaneously, tariffs on Chinese goods have increased from 10% in February to 20%.
At a press conference on Monday, Trump explained that his administration is now using “this very powerful tool.” His predecessors had not, he claimed, because they were “shameless, dumb, or corrupt.” Trump had initially imposed the tariffs on February 1, but delayed them by 30 days after a phone call with Mexico’s President Claudia Sheinbaum and Canada’s Prime Minister Justin Trudeau. In the intervening period, further negotiations will take place to achieve an agreement, the US President stated.
Following Trump’s implementation of the threat, Trudeau responded on Monday, announcing that Canada will retaliate with counter-tariffs of up to $155 billion. Immediately, $30 billion will be levied and within 21 days, an additional $125 billion will follow. Trudeau emphasized, “If the US tariffs are not withdrawn, we will engage in active and ongoing discussions with provinces and territories to take several non-tariff measures.”
Doug Ford, the Premier of Ontario, concurred, saying, “If the US government wants to destroy Ontario, I will do everything to stop it – including a stop to our electricity exports to the US.” This would affect 1.5 million households in the US states of Minnesota, Michigan and New York. Ford also called on individual retailers in his province to remove all US-made spirits from their shelves. Furthermore, a supply stop for nickel and other critical minerals to the US is a possibility, as 50% of the metal used in the US originates from Canada. The politician, however, stressed that a North American trade war would be an “absolute catastrophe” for both countries.
China, in turn, has announced 15% retaliatory tariffs on chicken, wheat, corn and cotton and 10% on soybeans, pork, beef, fish and seafood, as well as dairy products, fruits and vegetables. These measures will take effect on March 10, according to the government in Beijing, which stated, “The one-sided introduction of tariffs by the US harms multilateral trade, increases the financial burden on US companies and consumers and undermines the foundations of trade cooperation between China and the US.”
Trump had imposed the tariffs on China in the context of the acute fentanyl crisis in the US, claiming that China does too little to stop the smuggling of the dangerous opioid through Mexico. The US President also attributed his decision to the desire to eliminate the imbalance in trade with China, Mexico and Canada.