China and Canada immediately retaliate against Trump’s tariffs; Mexico is next

President Donald Trump’s blanket 25% tariffs on Mexico and Canada took effect on Tuesday, a move aimed at pressuring America’s top trading partners but threatening to weaken the North American economy. The tariffs come at a time of significant economic strain for inflation-weary consumers in the U.S.

Trump also doubled tariffs on all Chinese imports, raising them from 10% to 20%, adding to existing duties on hundreds of billions of dollars’ worth of Chinese goods. In response, China and Canada immediately imposed tariffs on American goods, with Mexico set to announce retaliatory measures on Sunday.

The Trump administration justified the tariffs as a measure to curb fentanyl trafficking into the U.S. “While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation,” the White House said in a statement.

Economic Fallout

The tariffs are expected to raise prices on a wide range of imported goods from Canada, Mexico, and China, which accounted for $1.4 trillion worth of U.S. imports last year—over 40% of all goods imported into the country.

Exemptions were made for energy-related imports from Canada, such as crude oil, which will instead be subject to a 10% tariff. However, fresh produce, cars, car parts, and electronics—including phones and computers—will now face tariffs of 20% to 25%.

The stock market responded negatively to the tariffs, with shares of global automakers with plants in Mexico falling sharply. Volkswagen’s stock dropped nearly 4%, while Stellantis, the maker of Chrysler and Jeep, fell by almost 7%.

China and Canada Hit Back

Beijing retaliated by announcing 15% tariffs on American chicken, wheat, corn, and cotton, along with a 10% tariff on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products. Additionally, China’s Ministry of Commerce blacklisted 15 American companies, including drone maker Skydio, barring Chinese firms from exporting dual-use equipment to them.

China’s response was described as “restrained and targeted” to pressure industries crucial to Trump’s supporters while leaving room for negotiations. Speaking at a press briefing, Chinese Foreign Ministry spokesperson Lin Jian warned, “China will fight till the end” if the U.S. continues with its tariff war.

Further retaliatory measures from China included stopping lumber imports from the U.S., suspending export permits for three American soybean companies, and launching an anti-dumping investigation into American fiber optic products.

Canadian Prime Minister Justin Trudeau also responded with immediate tariffs on C$30 billion ($20.7 billion) of U.S. goods and pledged to impose an additional C$125 billion ($86.2 billion) tariff by March 25. Ontario’s Premier Doug Ford threatened to cut off energy supplies to the U.S., saying, “If they want to try to annihilate Ontario, I will do everything, including cut off their energy, with a smile on my face.”

Mexico Prepares to Retaliate

Mexican President Claudia Sheinbaum announced that her country would impose retaliatory tariffs on American imports and introduce non-tariff measures on Sunday. She also plans to discuss the issue with Trump on Thursday.

“The unilateral decision made by the United States affects national and foreign companies operating in our country, as well as our people,” Sheinbaum said. “No one benefits from this decision.”

Impact on U.S. Economy

The tariffs arrive at a time when cracks are appearing in the U.S. economy. Consumer spending unexpectedly declined in January, while inflation remained stubbornly high. Consumer confidence also fell sharply, with the largest drop at the start of a year since 2009.

Job growth is expected to slow, with federal job cuts underway and spending reductions disrupting local economies. Trump’s immigration crackdown further threatens industries such as homebuilding and agriculture, which rely on foreign labor.

The National Foreign Trade Council (NFTC) expressed concern over the tariffs, warning they will “raise costs for American businesses and consumers and undermine U.S. economic growth.”

More Tariffs to Come?

The Trump administration hinted that this latest round of tariffs is just the beginning. Steel and aluminum tariffs are set to take effect on March 12, followed by reciprocal tariffs—matching those imposed on U.S. goods—on April 2.

Trump has also ordered an investigation into lumber tariffs, which could drive up home prices. Additionally, he suggested imposing tariffs on agricultural imports to boost domestic sales, which could take effect in April.

Credit: CNN