Canada & Mexico Announce Tariffs on U.S. Goods in Response to Trump's Tariffs

Canada and Mexico are taking action against the new U.S. tariffs imposed by President Donald Trump. The move, which includes a 25% tax on imports from both countries, has sparked concerns about disruptions to global trade.

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Canadian Prime Minister Justin Trudeau announced a 25% tariff on roughly C$155 billion ($106 billion) worth of American goods. Mexican President Claudia Sheinbaum also confirmed that Mexico will implement similar countermeasures. Meanwhile, China has vowed to respond to Trump’s 10% tariff on Chinese exports but has yet to provide specifics.

Growing Trade Dispute

The backlash follows Trump’s formal signing of the tariff orders, which are set to take effect at 12:01 a.m. on Tuesday. While negotiations could still take place, there is little indication of a resolution anytime soon.

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“This is a new chapter in trade tensions, affecting key allies and China as the U.S. pursues its economic and political goals,” said Gary Ng, a senior economist at Natixis SA.

China’s Commerce Ministry announced plans to file a complaint with the World Trade Organization (WTO), though it has avoided making direct threats of new tariffs on American imports. The Chinese government, led by President Xi Jinping, has been careful in its response, likely trying to avoid escalating tensions further.

Trump has justified the tariffs by pointing to concerns over illegal immigration and drug trafficking, particularly fentanyl. He has also hinted that Canada and Mexico could avoid these tariffs if they address these issues. However, his executive order allows for further tariff increases if they retaliate.

Impact on Businesses and Consumers

Energy imports from Canada, such as oil and electricity, will be hit with a 10% tariff instead of 25%, a move intended to limit price hikes on gasoline and home heating oil. However, the broader economic impact could be significant.

These new tariffs roll back the trade deal Trump previously negotiated with Canada and Mexico. Experts warn that rising costs for goods like food, housing, and fuel could put more strain on businesses and consumers. Economists also say the tariffs could disrupt supply chains, increase inflation, and slow down global trade.

The auto and energy industries are expected to feel the biggest impact. Given how closely the U.S. and Canadian manufacturing sectors are linked, the added costs could cause serious disruptions.

“These tariffs will hurt American jobs, investment, and consumers,” said Jennifer Safavian, president of Autos Drive America. “The auto industry would benefit more from reducing trade barriers and making regulations more business-friendly.”

Long-Term Economic Effects

Trump’s order also limits the de minimis exemption, which previously allowed small shipments from Canada, Mexico, and China to enter the U.S. tariff-free. This change could affect online retail and e-commerce businesses that rely on cross-border trade.

Mexico is considering additional non-tariff measures while pushing for more cooperation with the U.S. on border security and drug enforcement. Economists warn that if the tariffs stay in place too long, Mexico’s economy could suffer a severe downturn, with its currency potentially hitting record lows.

Democratic lawmakers were quick to criticize the tariffs, arguing that they will increase financial pressure on American families. Congressman Greg Stanton and 40 other representatives sent a letter warning that the new measures will drive up costs for everyday goods.

Republican lawmakers have been mostly quiet. While a few, like Senators Rand Paul and Susan Collins, have voiced concerns, most have remained supportive of Trump’s trade policies.

Canada and Mexico’s Next Steps

Canada is preparing tariffs on a range of U.S. products, including food, alcohol, and household appliances. The government is also considering restrictions on critical minerals. Trudeau has encouraged Canadians to support local businesses and rethink travel to the U.S.

The U.S. has warned that any retaliation from Canada or Mexico will lead to even higher tariffs. Trump’s policy allows the Secretary of Homeland Security to recommend lifting the tariffs if Canada and Mexico take steps to address his concerns. However, Canada has already increased border security, and Trump’s decision suggests that wasn’t enough to satisfy him.

In a speech, Trudeau highlighted Canada’s long history of working with the U.S. and urged for continued cooperation, particularly on issues like the fentanyl crisis.

Global markets remain uncertain as businesses assess the long-term impact of Trump’s trade policies. So far, stock markets have been relatively stable, but industries with deep ties to Canada, Mexico, and China—such as auto manufacturing—could see major disruptions.

With no clear solution in sight, the trade tensions are expected to have lasting effects on businesses, consumers, and international relations.

Also Read: President Trump’s New Tariffs on Canada, Mexico & China Could Raise Prices and Shake Markets