Canada and Mexico hit back with retaliatory tariffs on US as Donald Trump risks trade war
Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum both announced the counter-tariffs on Saturday night.
Mr Trudeau said Canada would impose 25% tariffs on $155bn Canadian dollars (£85.9bn) of US goods in response to Mr Trump‘s 25% tariffs on goods. Energy imported from Canada, including oil, natural gas and electricity, would be taxed at a rate of 10%.
Duties on $30bn Canadian dollars (£16.6bn) in trade in American alcohol and fruit will take effect on Tuesday when the US tariffs are set to start. The remaining $125bn Canadian dollars (£69.3bn) will take effect in 21 days.
Mr Trudeau opened his speech with a passionate message aimed at American consumers.
“It will have real consequences for you, the American people,” he said, saying it would result in higher prices on groceries and other goods.
The outgoing prime minister channelled the views of many Canadians who feel betrayed by their neighbour and longtime ally.
US action ‘split us apart’
Mr Trudeau reminded Americans that Canadian troops fought alongside them in Afghanistan and helped them respond to domestic crises including the wildfires in California and Hurricane Katrina.
“The actions taken by the White House split us apart instead of bringing us together,” Mr Trudeau said. He also encouraged Canadians to “choose Canadian products and services rather than American ones”.
What is Mexico’s stance?
Ms Sheinbaum said in a post on X that she had ordered her economic minister to implement tariff and non-tariff measures to defend Mexico’s interests.
“We categorically reject the White House’s slander that the Mexican government has alliances with criminal organisations, as well as any intention of meddling in our territory,” Ms Sheinbaum wrote.
“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 and the laundering of money that this illegal activity generates that has done so much harm to its population.”
Fentanyl crackdown
The Trump administration had said that the tariffs aimed to stop the spread and manufacturing of the opioid fentanyl, as well as pressuring America’s neighbours to limit illegal immigration to the US.
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China’s commerce ministry said it would challenge its 10% US tariff through the World Trade Organisation (WTO). The ministry said the measure “seriously violates” WTO rules and urged the US to “engage in frank dialogue and strengthen cooperation”.
Earlier on Saturday, President Trump signed the order imposing steep tariffs on imports from the three countries, risking a trade war and higher prices for American consumers.
Mr Trump declared an economic emergency in order to place duties of 25% on goods from Mexico and Canada, and 10% on all imports from China.
The tariffs also include a mechanism to escalate the rates if the countries retaliate.
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Mexico and Canada are two of America’s largest trading partners, with the tariffs upending decades-old trade relationships.
Could US measures push up inflation?
Mr Trump said on social media that the tariffs – a longstanding campaign promise – were necessary “to protect Americans”.
But the taxes may throw the global economy into turmoil and significantly worsen inflation in the US – which has already increased the prices of groceries, fuel, housing, cars and other goods.
Read more:
How Trump’s tariffs could impact consumers
Why is Trump imposing the tariffs?
A new analysis by the Budget Lab at Yale University found that the average US household would lose the equivalent of $1,170 US dollars (£944) in income from the tariffs. The research also found that economic growth would slow and inflation would worsen – especially if Canada, Mexico and China retaliate.
“It doesn’t make much economic sense,” said William Reinsch, senior adviser at the Centre for Strategic and International Studies and a former US trade official.
“Historically, most of our tariffs on raw materials have been low because we want to get cheaper materials so our manufacturers will be competitive… Now, what’s he talking about? He’s talking about tariffs on raw materials. I don’t get the economics of it.”
Mr Trump appears to be preparing more import taxes.
On Friday, he suggested imported computer chips, steel, oil and natural gas, as well as copper, pharmaceutical drugs and imports from the European Union may be subject to tariffs, which could pit the US against much of the global economy.
