The United States has intensified its trade wars with key economic partners as steep tariffs on Canadian, Mexican, and Chinese goods came into effect on Tuesday. The move has triggered swift retaliatory measures from both Beijing and Ottawa, further straining international trade relations.
US President Donald Trump imposed the tariffs after citing concerns over illegal immigration and drug trafficking, particularly fentanyl, from Canada and Mexico. The new duties are expected to affect over $918 billion worth of imports, disrupting supply chains across multiple industries, including automobiles and construction materials.
China’s Response
In addition to raising tariffs on North American goods, Trump also signed an order to increase the existing 10 percent tariff on Chinese imports to 20 percent. China quickly condemned the decision, calling it a “unilateral imposition of tariffs by the US,” and announced countermeasures. Beijing will impose 10 and 15 percent tariffs on American agricultural products such as chicken, soybeans, and dairy, starting next week.
Economic Consequences and Market Reaction
Economists warn that the new tariffs could drive up consumer prices, slow economic growth, and lead to job losses. The Tax Foundation estimates that, even before accounting for foreign retaliation, these tariffs could shrink US economic output by 0.1 percent.
Markets reacted negatively to the trade escalation. Japan’s Nikkei index fell over 2 percent, while Hong Kong’s Hang Seng dropped 1.5 percent following Trump’s tariff announcements.
Canada and Mexico Push Back
Canadian Prime Minister Justin Trudeau announced retaliatory 25 percent tariffs against the US, vowing that Canada would not let the “unjustified decision go unanswered.” Mexican President Claudia Sheinbaum also indicated that Mexico has contingency plans in place to counteract the economic impact.
Industry Concerns
Trump’s aggressive tariff strategy has faced opposition from business groups. The US-China Business Council, representing over 270 American firms, warned that broad tariffs would harm US businesses, consumers, and farmers. The National Retail Federation added that the tariffs on Canada and Mexico would drive up household goods prices for Americans.
Industries such as homebuilding are also expected to bear the brunt. A combined duty tariff rate above 50 percent on Canadian lumber could add an estimated $7,500 to $10,000 in costs for newly built homes, according to the National Association of Home Builders.
With analysts warning that these tariffs could lead to the highest effective US tariff rate since 1936 by 2026, trade tensions are expected to persist, raising concerns over global economic stability.
