President Donald Trump delivered on his threat to hit Canada and Mexico with sweeping import tariffs, imposing one of the largest increases in US tariffs since the 1930s in a dramatic escalation of a trade war that stands to upend ties with major economic partners.
The new tariffs — 25% duties on most Canadian and Mexican imports and the doubling of an existing 10% charge on China to 20% — impact roughly $1.5 trillion in annual imports, an expansive move signaling to markets that the Republican president is committed to wielding import duties to obtain fresh revenue and create domestic manufacturing jobs.
Trump’s move prompted swift retaliation from Canada and China and may spur similar reprisals from Mexico — as well as potential legal challenges. It leaves uncertain the fate of a trade pact Trump negotiated with Canada and Mexico in his first term and risks further straining the US economy and rekindling still simmering inflation.
Trump’s vow to move ahead with the tariffs accelerated a sell off in US stocks on Monday, with the S&P 500 down 1.8% on the day. Losses spread to Asian equities on Tuesday. The Canadian dollar and Mexican peso slumped after Trump — who previously delayed the Canada and Mexico duties — reaffirmed his plans to go ahead with the new import taxes.
The tariffs bring American import levies to their highest average level seen since 1943, according to the Budget Lab at Yale.
The Canadian government late Monday announced it will proceed with a sweeping package of counter-tariffs against US-made products. The first stage is 25% tariffs on about C$30 billion ($20.6 billion) worth of goods from US exporters to go into effect at the same time as the US levies.
A second round of tariffs at the same rate will be placed on C$125 billion of products in three weeks — a list that will include big-ticket items like cars, trucks, steel and aluminum.
“Canada will not let this unjustified decision go unanswered,” Prime Minister Justin Trudeau said in a statement late Monday. The retaliation plan is the same as the one he announced in February after Trump signed his executive order for broad tariffs.
China imposed tariffs on US exports and added 10 firms to an unreliable entity list in retaliation for the Trump administration’s new levy. Beijing said it would charge a duty as high as 15% on American goods including chicken and cotton, while soybeans will face a 10% tariff.
Trump has signaled a desire to speak with Chinese leader Xi Jinping, but they have yet to talk a month after the US president raised the possibility of a call to negotiate a deal.
Mexican President Claudia Sheinbaum on Monday said her government would await Trump’s decision before reacting with retaliatory measures.
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