President Donald Trump has implemented a long-anticipated set of tariffs on imports from Canada and Mexico, effective today, causing jitters in global markets and prompting expected retaliatory measures from the US’s North American neighbours. Starting just after midnight, a 25% tax will be applied to imports from Canada and Mexico, with Canadian energy products subject to a 10% tariff. Additionally, Trump’s previously imposed 10% tariff on Chinese imports will be increased to 20%.
In response to these tariffs, Canadian Prime Minister Justin Trudeau announced intentions to impose duties on over AUD 161 billion worth of American goods within 21 days. While Mexico and China have not immediately outlined their reactions, the prospect of escalating trade tensions looms, raising concerns about inflation and the potential for a trade war. Despite these challenges, Trump asserts that tariffs are essential for national prosperity, countering mainstream economic warnings.
During a press statement at the White House, Trump described tariffs as a powerful tool that has previously been underutilised, stating, “It’s a very powerful weapon… and now we’re using them.” The tariffs, initially set to launch in February, were postponed for negotiations, but are now positioned to address issues like drug trafficking and illegal immigration, despite both Canada and Mexico claiming progress in these areas.
Economic analysts worry that the turmoil injected by Trump into global trade dynamics could lead to more tariffs, affecting other nations and sectors, including the European Union and industries like automotive and pharmaceuticals. This unpredictability has been noted by experts, creating a climate of uncertainty regarding future government actions.
Criticism of the tariffs came swiftly from Democratic lawmakers and even some Republicans, such as Senator Susan Collins, who raised concerns due to Maine’s economic ties with Canada. She highlighted that many products, like lobsters and blueberries, are processed in Canada before returning to the US, indicating potential adverse impacts on local economies.
In response to America’s tariff actions, Canada will enforce a 25% tariff on a total of AUD 172 billion in American goods, beginning the process with immediate tariffs on AUD 33 billion worth of products, before expanding to the total amount over the next three weeks. Trudeau emphasised that Canadian tariffs will remain until US tariffs are lifted, and discussions with provinces are ongoing about additional non-tariff measures.
The White House is seeking reductions in fentanyl seizures to resolve the tariff situation, as recent interceptions across various states were linked to foreign drug cartels. As the world grapples with heightened trade tensions, experts predict a tit-for-tat scenario, indicating that countries like Canada and the EU have prepared lists of retaliatory measures.
As the tariffs take effect, the implications of Trump’s aggressive trade strategy remain uncertain, with significant impacts anticipated on various sectors, including the toy industry, which relies heavily on Chinese manufacturing, highlighting a complex web of global trade relationships that may take time to adjust.