US Imposes Tariffs on Mexico, Canada, China As Trade War Looms

Last Updated:February 02, 2025, 07:56 IST

Donald Trump imposed tariffs on Mexico, Canada, and China, citing security concerns. Meanwhile, Canada and Mexico have warned of retaliation.

US President Donald Trump (Photo: AP)

US President Donald Trump early on Sunday signed an order to impose stiff tariffs on imports from Mexico, Canada and China. Hours later, the President of Mexico ordered retaliatory tariffs, while Canada’s Prime Minister said his country was “prepared" to respond quickly. However, the order signed by Trump also includes a mechanism to escalate the rates if the countries retaliate against the US.

The decision throws the global economy and Trump’s own political mandate to combat inflation into possible turmoil, though the Republican president posted on social media that it was necessary “to protect Americans".

“Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. This was done through the Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl," Trump wrote on his Truth Social account.

“We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it," he added.

The tariffs risk an economic standoff with America’s two largest trading partners in Mexico and Canada, upending a decades-old trade relationship with the possibility of harsh reprisals by those two nations.

The tariffs, also if sustained, could cause inflation to significantly worsen, possibly eroding the voters’ trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.

Trump declared an economic emergency in order to place duties of 10 per cent on all imports from China and 25 per cent on imports from Mexico and Canada. However, energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10 per cent rate.

The tariffs would go into effect on Tuesday, setting a showdown in North America that could potentially sabotage economic growth.

A new analysis by the Budget Lab at Yale laid out the possible damage to the US economy, saying the average US household would lose the equivalent of $1,170 in income from the taxes. Economic growth would slow and inflation would worsen — and the situation could be worse if Canada, Mexico and China retaliate, according to The Associated Press.

WHAT THESE TARIFFS MEAN

The order signed by Trump contained no mechanism for granting exceptions, AP quoted an official as saying, a possible blow to homebuilders who rely on Canadian lumber as well as farmers, automakers and other industries.

The Trump administration put the tariffs in place to force the three countries to stop the spread and manufacturing of fentanyl, in addition to pressuring Canada and Mexico to limit any illegal immigration into the United States.

The official did not provide specific benchmarks that could be met to lift the new tariffs, saying only that the best measure would be fewer Americans dying from fentanyl addiction.

The order would also allow for tariffs on Canadian imports of less than $800. Imports below that sum are currently able to cross into the United States without customs and duties.

The Republican president is making a major political bet that his actions will not significantly worsen inflation, cause financial aftershocks that could destabilize the worldwide economy or provoke a voter backlash.

WHAT MEXICO AND CANADA SAID IN RESPONSE

Responding on X, Mexican President Claudia Sheinbaum said she had instructed her economy secretary to implement a response that includes retaliatory tariffs and other measures in defense of Mexico’s interests.

“We categorically reject the White House’s slander that the Mexican government has alliances with criminal organizations, as well as any intention of meddling in our territory," 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," she wrote.

Canadian Prime Minister Justin Trudeau on Saturday said that Canada is ready to address the tariffs the US government announced.

In a message on his X account, he was to talk to Sheinbaum about the US administration decision, and later he would speak to Canadians.

“We did not want this, but Canada is prepared," he said.

News world US Imposes Tariffs on Mexico, Canada, China As Trade War Looms