Decision could set the stage for a damaging trade war between the US and three of its top trade partners
Donald Trump has signed an order authorizing tariffs after vowing to impose dramatic taxes on goods from Canada, Mexico and China.
The decision could set the stage for a damaging trade war between the US and three of its top trade partners. Trump has also threatened to impose tariffs against European Union nations.
Trump signed three executive orders on Saturday imposing tariffs of 25% on all goods from Mexico and Canada, the New York Times reported.
Trump imposed a 10% tariff on Canadian oil exports, as well as a 10% tariff on items from China.
The Times reported that Trump’s tariffs were scheduled to go into effect on Tuesday. An official told the newspaper that these tariffs contained a retaliation clause that would ratchet up American tariffs if Mexico, Canada or China tried to place their own tariffs on US goods in response.
Trump is imposing the tariffs under the International Emergency Economic Powers Act. The president cited the US opioid crisis when imposing his executive order, laying much of the blame for drug trafficking on Canada.
In a post on Truth Social, Trump said: “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.”
The country “played a central role in these challenges, including by failing to devote sufficient attention and resources or meaningfully coordinate with United States law enforcement partners to effectively stem the tide of illicit drugs”, Trump claimed.
Trump’s office said that Chinese officials had failed to prevent drug precursors from being shipped to Mexico and used by cartels. He also alleged that Mexican drug traffickers have an “intolerable allience with the government of Mexico”.
In a fact sheet on the tariffs, Trump also cited the “threat posed by illegal aliens” in his decision.
Trump’s decision to levy a 10% tariff rate on Canadian energy products seems to be some sort of recognition that tariffs can spur higher prices.
The White House has contended that tariffs will not fan the flames of inflation.
Goods from these three countries comprise more than one-third of imports into the US, including apparel, medicine, electronics and steel, the newspaper reported.
Despite Trump’s warning that they would be met with ramped-up tariffs, Canada and Mexico said they would meet his plan with tariffs on US imports.
Ontario premier Doug Ford said: “Canada now has no choice but to hit back and hit back hard. Canada has so much of what America needs: high-grade nickel and other critical minerals, energy and electricity, uranium, potash, aluminum. We need to maximize our points of leverage and use them to maximum effect.”
Canada reportedly said it would impose tariffs on Florida orange juice and whiskey from Tennessee, as well as Kentucky-made peanut butter.
All three states are represented by Republican senators and voted for Trump in 2024, the Times notes.
Claudia Sheinbaum, the president of Mexico, said that her country should move forward with a “cool head” and a planned retaliatory response, per the Times.
The newspaper noted that Trump did not engage in any serious negotiations with these countries before issuing his decision.
Sheinbaum, during a speech at an unrelated event, minutes after news of Trump’s tariffs came through, appeared to rally her base. “When we negotiate with other nations, when we talk with other nations, we always do so with our heads held high, never with our heads down,” she said.
In a statement released on social media, Sheinbaum said: “We categorically reject the White House’s slander of the Government of Mexico having alliances with criminal organisations.” She proposed establishing a workforce with Trump to combat the issues he has with Mexico, saying: “Problems are not resolved by imposing tariffs.”
The tariffs could have dire repercussions for Mexico. “We have to remember that 40% of Mexico’s GDP are exports,” said Gabriela Siller, director of economic analysis at Grupo Financiero Base, adding that the Mexican economy could enter a “severe recession” if the tariffs were maintained.
The American Chamber of Commerce in Mexico, which represents US companies in Mexico, said the tariffs would hit both economies and “fail to address the real challenges of security, migration, and drug trafficking,” adding that, “America First does not mean America Alone.”
Economists have repeatedly sounded the alarm that higher tariffs will raise prices on consumer goods for Americans, exacerbating an increased cost of living. Trump did recognize on Friday that his tariffs could prompt “temporary short-term disruption”.
He said he hoped that Americans would understand why he was imposing them. “Tariffs don’t cause inflation,” Trump claimed. “They cause success.”
Washington senator Patty Murray posted on social media: “Trump’s tariffs will cost families – literally. It’s not Mexico or Canada or China who pays for these increases, it’s YOU. And you’ll feel it on your wallet everywhere you shop.”
Colorado governor Jared Polis agreed: “Trump’s tariffs will be a tax on Coloradans and American families, and increase the cost of everything from food to gas. Trump’s tariffs make us less competitive, hurt people and quite frankly make no sense.”
Jason Smith, the ways and means committee chair, championed the tariffs. “President Trump is delivering on his promise … The tariffs on imports from Canada, Mexico and China send a powerful message that the United States will no longer stand by as other nations fail to halt the flow of illegal drugs and immigrants into our country,” he said in a statement. “These measures will also bring in billions in new revenue to the US government.”
The Tax Foundation, a conservative group, has estimated that Trump placed $80bn in tariffs on approxiately $380bn worth of products in 2018 and 2019. The foundation described this as “one of the largest tax increases in decades”.
Joe Biden’s administration kept the majority of these tariffs in place, and increased tariffs on an additional $18bn of Chinese goods, including semiconductors and electric vehicles.
