Donald Trump hit Canada, Mexico and China with steep tariffs on Saturday in a move that launches a new era of trade wars between the US and three of its largest trading partners.
Trump issued an executive order applying additional tariffs of 25 per cent to all imports from Canada and Mexico, with the exception of Canadian oil and energy products, which will face a 10 per cent levy. Canada is by far the biggest foreign oil supplier to the US, accounting for about 60 per cent of its crude imports.
Imports from China will face a 10 per cent tariff over and above existing US tariffs.
Posting on Truth Social, Trump said he used emergency powers to issue the tariffs “because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl”.
The tariffs would apply from Tuesday, the White House said.
An administration official said each order contained “a retaliation clause . . . so that if any country chooses to retaliate in any way, the signal will be to take further action with respect to likely increased tariffs”.
In response, Canada’s Prime Minister Justin Trudeau announced 25 per cent tariffs on C$155bn (US$107bn) worth of goods, including US alcohol, clothing, household appliances and lumber.
Trudeau said tariffs would put US jobs at risk, “potentially shutting down American auto assembly plants and other manufacturing facilities. They will raise costs for you, including food at the grocery stores and gas at the pump”.
Mexico’s President Claudia Sheinbaum said the country would also launch retaliatory tariffs and other measures.
“You don’t solve problems by imposing tariffs, but with talking and dialogue,” she wrote on X.
In Beijing on Sunday, the foreign ministry said China “firmly deplores and opposes this move” and will take “necessary countermeasures to defend its rights and issues”.
It said the tariffs were imposed “under the pretext of the fentanyl issue”, but that it is “one of the world’s toughest countries on counternarcotics both in terms of policy and its implementation”.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note that the 10 per cent tariff was “not a big shock to China’s economy” and was “unlikely to change the market expectation on China’s macro outlook this year”.
The moves were roundly condemned by industry groups and economists, with the US Chamber of Commerce warning they would “raise prices for American families and upend supply chains”.
The largest US fossil fuel lobby group, the American Petroleum Institute, warned that North American energy markets were “highly integrated,” and that free trade was “critical”.
The president used the International Emergency Economic Powers Act, an executive authority that allows him to respond to emergencies through economic means, to apply the levies without congressional approval. The law has not previously been used to enact tariffs, although Trump threatened to use it against Mexico in 2019.
Trump’s abrupt opening move will dash the hopes of countries that expected a slower and more cautious approach to trade policy after the Trump administration ordered a raft of reviews into US commercial relationships on inauguration day.
It also signals the president’s willingness to use tariffs to apply pressure to allies on issues ranging from immigration to drug trafficking. Trump has justified the tariffs by complaining about what he says is lax security at the borders with Mexico and Canada, and arguing that both — along with China — have failed to do enough to stem the flow of deadly opioids into the US.
On Saturday, a White House official said the tariffs would be lifted as soon as “Americans stop dying from Made in China, distributed by Mexico and Canada fentanyl”.
The official added: “This is not just about fentanyl . . . this is really a border security issue.”
Trump has also cited America’s trade deficit with Canada, Mexico and China as justification for the tariffs. On Friday, he acknowledged that they may cause some “disruption”, but added: “The tariffs are going to make us very rich, and very strong.”
On Friday, Trump said he planned to levy tariffs on EU imports too, but Saturday’s announcement did not include any measures relating to the EU.
Trump held back from imposing the 60 per cent tariff on Chinese imports from China that he had threatened during the presidential campaign. The 10 per cent levy was designed to punish Beijing over the flow of ingredients to make fentanyl, a deadly opiate that has been the leading cause of death for Americans aged 18 to 45 over the past three years.
Beijing cracked down on the export of fentanyl several years ago, but groups in China switched to exporting precursor chemicals to cartels in Mexico to produce the final product.
Dimitry Anastakis, a professor of business at the University of Toronto, said the US tariffs could be a shock to the system as painful as the Covid pandemic.
“It is unnecessary and quite stupid,” he said. “This is taking a sledge hammer to a non-existent problem with the North American economy that was working pretty well.”
Anastakis said there will be immediate pain in the auto trade, job losses and a likely recession in Canada.
Additional reporting by Demetri Sevastopulo in Washington
