Trump imposes tariffs but Canada and Mexico hit back

U.S. President Donald Trump has announced new sweeping tariffs on all goods imported from the United States' three major trading partners – China, Mexico, and Canada. Trump stated that the U.S. will impose a 25% tariff on Canada and Mexico, and a 10% tariff on China, while Canadian energy will face a lower 10% tariff.

Trump had threatened these import taxes if the three countries did not address his concerns about illegal immigration and drug trafficking. The total imports from these three countries accounted for more than 40% of U.S. imports last year. "Today’s tariff announcement is necessary to hold China, Mexico, and Canada accountable for failing to uphold their commitments to stop the flow of toxic drugs into the U.S.," the White House said in a statement on X on Saturday.

Trump posted on his Truth Social platform: "This is being done through the International Emergency Economic Powers Act (IEEPA) because illegal immigration and deadly drugs, including fentanyl, pose a grave threat to our citizens." From a practical standpoint, tariffs are domestic taxes levied on goods entering a country, with the tax rate being proportional to the value of the imported goods.

China has warned that Trump's return to the presidency has renewed the threat of a trade war between the world's two largest economies and has opposed trade protectionism. Chinese Vice Premier Ding Xuexiang said at the World Economic Forum in Davos, Switzerland, last month that China is seeking a "win-win" solution to trade tensions and hopes to expand imports.

Canada and Mexico have indicated they will impose reciprocal measures on U.S. tariffs on their goods, while also trying to assure Washington that they are taking action to address concerns about their U.S. borders. To avoid tariffs completely, Ottawa had pledged C$1.3 billion ($900 million; £700 million) in new security measures at its U.S. border. Canadian Prime Minister Justin Trudeau is scheduled to speak to the media on Saturday evening.

The Canadian Chamber of Commerce released a statement prior to Trump's “deeply troubling decision” on tariffs. The statement said the tariffs will have a "direct and immediate impact" on the livelihoods of Canadians and Americans and will "dramatically increase the cost of all goods for everyone."

The White House explained that Mexican drug cartels are responsible for the trafficking of fentanyl, methamphetamine, and other drugs, justifying why its major trading partners are being targeted. The White House stated that tariffs on Canada will last until Canada "cooperates with the U.S. in combating drug traffickers and border security." Finally, the White House stated that "China plays a central role in the fentanyl crisis," exporting the deadly synthetic painkiller.

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