US President Donald Trump's new 25 per cent tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20 per cent, launching new trade conflicts with the top three US trading partners.
The tariff actions, which could upend nearly $3.5 trillion in two-way annual US trade went live just hours after Trump declared that all three countries had failed to do enough to stem the flow of the deadly fentanyl opioid and its precursor chemicals into the US.
China responded immediately after the deadline, announcing additional tariffs of 10-15 per cent on certain US imports from 10 March and a series of new export restrictions for designated US entities.
Canada and Mexico, which have enjoyed a virtually tariff-free trading relationship with the US for three decades, were poised to immediately retaliate against their longtime ally.
Canadian Prime Minister Justin Trudeau said Ottawa would respond with immediate 25 per cent tariffs on $33 billion worth of US imports, and another $138 billion if Trump's tariffs were still in place in 21 days. He said previously that Canada would target American beer, wine, bourbon, home appliances and Florida orange juice.
"Tariffs will disrupt an incredibly successful trading relationship," Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.
Ontario Premier Doug Ford told NBC that he was ready to cut off shipments of nickel and transmission of electricity from his province to the US in retaliation.
Mexican President Claudia Sheinbaum was expected to announce her response during a morning news conference in Mexico City on Tuesday, the country's economy ministry said.
Beijing punished over fentanyl overdose crisis
The extra 10 per cent duty on Chinese goods adds to a 10 per cent tariff imposed by Trump on 4 February to punish Beijing over the US fentanyl overdose crisis. The cumulative 20 per cent duty also comes on top of tariffs of up to 25 per cent imposed by Trump during his first term on some $595 billion worth of US imports.
Some of these products saw US tariffs increase sharply under former president Joe Biden last year, including a doubling of duties on Chinese semiconductors to 50 per cent and a quadrupling of tariffs on Chinese electric vehicles to over 100 per cent.
The 20 per cent tariff will apply to several major US consumer electronics imports from China previously untouched by prior duties, including smartphones, laptops, video game consoles, smartwatches, speakers and Bluetooth devices.
China's new tariffs announced on Tuesday targeted a wide range of US agricultural products including certain meats, grains, cotton, fruit, vegetables and dairy products.
Beijing also placed 25 US firms under export and investment restrictions on national security grounds. Ten of these firms were targeted for selling arms to Taiwan.
China's commerce ministry said the US tariffs violated World Trade Organization rules and "undermine the basis for economic and trade cooperation between China and the US".
Recession fears
Even before Trump's tariffs announcement, US data on Monday showed factory gate prices jumped to a nearly three-year high, suggesting that a new wave of tariffs could soon undercut production.
Trump's confirmation that the tariffs would proceed sent financial markets reeling with global stocks tumbling and safe-haven bonds rallying. Both the Canadian dollar and Mexican peso fell against the greenback.
Trump has maintained a blistering pace of tariff actions since taking office in January, including fully restored 25 per cent tariffs on steel and aluminum imports that take effect 12 March, rescinding prior exemptions.
Trump's "America First" agenda, aimed at redrawing trade relationships in favor of the US, is expected to be a centrepiece of his Wednesday address to a joint session of Congress.
