U.S. President Donald Trump’s new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, alongside a doubling of duties on Chinese goods to 20%, sparking fresh trade disputes with the top three U.S. trading partners.
The tariff measures, which could impact nearly $2.2 trillion in annual two-way trade, were implemented at 12:01 a.m. EST (0501 GMT), just hours after Trump accused all three nations of failing to curb the flow of fentanyl and its precursor chemicals into the U.S.
China responded immediately after the deadline by announcing additional tariffs of 10%-15% on select U.S. imports starting March 10, along with new export restrictions targeting designated American entities.
Canada and Mexico, which have benefited from nearly three decades of tariff-free trade with the U.S., were prepared to retaliate against their long-standing ally.
Canadian Prime Minister Justin Trudeau announced that Ottawa would impose immediate 25% tariffs on C$30 billion ($20.7 billion) worth of U.S. imports, with an additional C$125 billion ($86.2 billion) in tariffs if Trump’s measures remained in place for 21 days. He previously stated that Canada would target U.S. beer, wine, bourbon, home appliances, and Florida orange juice.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, arguing that the measures violate the U.S.-Mexico-Canada free trade agreement, which Trump signed during his first term.
Ontario Premier Doug Ford told NBC that he was prepared to halt shipments of nickel and electricity transmission from his province to the U.S. as a retaliatory measure.
Mexico’s President Claudia Sheinbaum was expected to outline her country’s response during a morning press conference in Mexico City, according to the economy ministry.
Increasing Tariffs on China
The additional 10% duty on Chinese imports builds upon the 10% tariff Trump imposed on February 4, aimed at punishing Beijing over the fentanyl crisis in the U.S. The combined 20% tariff adds to preexisting levies of up to 25% imposed on approximately $370 billion worth of U.S. imports from China during Trump’s first term.
Certain products had already seen significant tariff increases under former President Joe Biden, including a doubling of duties on Chinese semiconductors to 50% and a fourfold increase in tariffs on Chinese electric vehicles, exceeding 100%.
The 20% tariff will now apply to several major consumer electronics imported from China that were previously exempt, including smartphones, laptops, video game consoles, smartwatches, speakers, and Bluetooth devices.
China’s newly announced tariffs on Tuesday targeted a range of U.S. agricultural goods, including specific meats, grains, cotton, fruits, vegetables, and dairy products.
Additionally, Beijing placed 15 U.S. entities on its export control list and added 10 American firms to its unreliable entity list.
Earlier in the day, China’s Commerce Ministry criticized Washington for wrongly “shifting the blame” for its fentanyl crisis onto Beijing.
The state-run Global Times reported on Monday that China’s retaliation would likely focus on U.S. agricultural and food products.
During Trump’s first term, U.S. farmers bore the brunt of trade disputes, losing an estimated $27 billion in export sales and market share to Brazil.
Economic Repercussions and Recession Concerns
The tariffs on Mexican and Canadian goods could have far-reaching effects on the deeply integrated North American economy, which relies heavily on cross-border trade for manufacturing vehicles, refining energy, and processing agricultural products.
“Today’s reckless decision by the U.S. administration is pushing both Canada and the U.S. toward recessions, job losses, and economic turmoil,” said Candace Laing, CEO of the Canadian Chamber of Commerce, in a statement.
She argued that the tariffs would not usher in the “golden age” Trump envisions but instead drive up costs for consumers and businesses while disrupting supply chains. “Tariffs are a tax on the American people,” she added.
Matt Blunt, president of the American Automotive Policy Council, which represents Detroit’s major automakers, urged exemptions for vehicles that comply with the U.S.-Mexico-Canada Agreement’s regional content requirements.
Even before Trump’s tariff announcement, U.S. economic data released on Monday showed that factory gate prices had surged to their highest levels in nearly three years, suggesting that new trade restrictions could further strain production.
Trump’s confirmation that the tariffs would proceed sent global financial markets tumbling, triggering a rally in safe-haven bonds, while both the Canadian dollar and Mexican peso weakened against the U.S. dollar.
Expanding Trade Measures
Since taking office in January, Trump has aggressively escalated tariff actions, including reinstating the full 25% tariffs on steel and aluminum imports, set to take effect on March 12, reversing prior exemptions.
Trump’s “America First” trade policy, which seeks to reshape global trade in favor of the U.S., is expected to be a focal point of his address to a joint session of Congress on Tuesday night.
On Saturday, he launched a national security investigation into imports of lumber and wood products, which could lead to significant tariffs. Canada, which already faces 14.5% U.S. tariffs on softwood lumber, would be particularly affected.
A week earlier, Trump revived a probe into foreign countries imposing digital services taxes, proposed levies of up to $1.5 million per Chinese-built ship docking at U.S. ports, and initiated a tariff review on copper imports.
These actions add to his broader plans for “reciprocal tariffs” designed to match the trade barriers imposed by other nations, a move that could significantly impact the European Union.
