Canada and China impose tariffs on US goods in response to Trump’s decision
Photo: US trading partners responded to Trump (Getty Images)
China and Canada have imposed retaliatory tariffs on US goods following President Donald Trump's decision to launch a trade war against the country’s largest partners. Mexico is also preparing its own measures, Reuters reports.
Trump’s new 25% tariffs on goods from Mexico and Canada, as well as a doubling of duties on Chinese goods to 20%, went into effect on March 4.
Canadian Prime Minister Justin Trudeau announced that in response, Canada is imposing 25% tariffs on 30 billion Canadian dollars’ worth of US imports. These tariffs will remain in place until the US lifts its tariffs against Canada.
The 30 billion Canadian dollars is part of a broader 155 billion dollar countermeasure targeting US imports, with the remaining 125 billion dollars set to take effect after a 21-day consultation period.
China announced that starting March 10, it will impose additional tariffs of 10-15% on certain types of imports from the United States.
Mexican President Claudia Sheinbaum is expected to announce her country’s response during a morning press conference in Mexico City on March 4.
Trade war
Corporate executives and economists warn that Trump’s tariffs on Canada and Mexico, which affect more than $900 billion in annual US imports, will severely impact North America's highly integrated economy.
"The decision by Trump to go ahead with tariffs on Mexico and Canada has turned fear into reality," said Vasu Menon, managing director of investment strategy at OCBC.
Menon stated that the tariffs will rattle markets, as investors worry that this move will raise inflation expectations and slow US economic growth, given the significant share of US imports coming from these countries.
"There is also an additional risk that Canada and Mexico will take further retaliatory measures, and if that happens, Trump could raise the stakes even higher, causing even more concern," the managing director of investment strategy at OCBC added.
Currency markets
The Canadian dollar and Mexican peso fell to their lowest level in a month on Tuesday, as fears of a trade war became a reality.
The euro slightly declined to $1.04795 after a sharp rise in the previous session, as traders remain on edge, hoping for a peace deal to end the war in Ukraine, while European leaders push for a ceasefire proposal.
The American dollar remained the only currency stable after a White House official confirmed that the United States is suspending military aid to Ukraine, just days after Trump had a clash with Ukrainian President Volodymyr Zelenskyy in the Oval Office, a move that has unsettled investors.
