The US will push sharp tariffs in Canada and Mexico starting Tuesday, and Donald Trump said he has set the stage for a trade war with his country’s two biggest economic partners.
Hours before his administration, the US president claimed that “there are no rooms left” for deals to avoid their levying import obligations, as he is planning to attack America’s closest neighbors. The announcement led to a sharp sale on Wall Street.
All Mexican exports to the US are set to face 25% collection under the plan. Most Canadian exports face 25% tariffs and energy products face 10% duty.
According to an executive order released by the White House, the 10% tax in China was introduced last month, but doubled to 20%.
China’s Commerce Ministry on Tuesday pledged its measures that were said to be aimed at protecting its rights and interests. The US is using the fatal drug fentanyl issue as an excuse to impose tariffs because it “changed the blame,” the department said in a statement.
The US claims that China supplies chemicals used to produce fentanyl. China has denied fraud. China is urging the US to “instantly withdraw” unilateral tariff measures “absential, unfounded and harmful to others,” the ministry said.
However, at a press conference, Trump told reporters that tariffs are “a very powerful weapon.”
Actions are set to encourage quick retaliation. “We’re ready,” said Canadian Foreign Minister Melanie Jolly.
Canadian Prime Minister Justin Trudeau issued a statement Monday, calling US tariffs “unjust” and vowing to respond quickly with a 25% tariff.
“Our tariffs will continue to be in place until US trade measures are withdrawn,” Trudeau said, urging the US to reconsider the tariffs. “Taxes disrupt very successful trading relationships. They violate the very trade agreement negotiated by President Trump in his previous period.”
Wall Street saw the S&P 500 fall 1.7%, the Dow Jones industrial average fell 1.5%, and the tech-heavy NASDAQ fell by more than 2.6% after Trump’s remarks.
The tariffs affect $900 million per year imports from Canada and Mexico. Ford CEO Jim Farley warns that they are threatening to “blow the hole” into the US industry.
Trump has reluctantly admitted in recent weeks that higher tariffs could lead to higher prices in the US, but has suggested that the impact would be worth the cost. He called to step carefully, escalating the threat of going further.
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“Taxes are easy, fast, efficient and brings fairness,” Trump said. He described it as a “strong weapon” that other presidents were not using because they were “illegal, stupid or otherwise rewarded.”
Trump swiped over Republican hero and solid free trader President Ronald Reagan. “I’m a big Ronald Reagan fan, but he had very bad trade,” Trump said.
Tariffs are “some degree of war,” billionaire investor Warren Buffett recently warned. “As time goes by, they’re taxes on products,” he told CBS News. “I mean, the tooth fairy doesn’t pay!”
On Monday, Trump also pledged to impose tariffs on agricultural products overseas within weeks. He claimed that his administration would introduce tariffs on agricultural products from April 2nd.
But a series of deadlines in January, including a pledge to strike Canada and Mexico with tariffs, and February is behind as economists and business leaders are calling attention.
“To the great farmers of America: Be prepared to start making lots of produce to sell a lot of produce within the United States,” Trump wrote on Monday about his social network, True Social. “The tariffs will be posted on external products on April 2nd. Enjoy!”
