China, Canada and Mexico vow swift response to Trump tariffs
Getty ImagesCanada, Mexico and China have vowed to respond to sweeping new tariffs to their exports to the US announced by President Donald Trump.
Trump said a levy of 25% on Canadian and Mexican imports as well as an additional 10% tax on Chinese goods would come into force on Tuesday. Canadian energy faces a lower 10% tariff.
The US president said the move was in response to his concerns about illegal immigration and drug trafficking - two of the main promises on which he was elected.
In response, both Canada and Mexico said they were preparing similar tariffs on US goods, while China added it would take "necessary countermeasures to defend its legitimate rights and interests".
The implementation of tariffs and the subsequent retaliation could mark the start of a new era of global trade wars.
Economists have warned the introduction of the import taxes by the US, and the responses from other countries, could lead to prices rising on a wide range of products, from cars, lumber, and steel to food and alcohol.
Consumers in all countries could see an increase in the cost of living if businesses decide to pass on higher costs to customers, with US industry groups already raising the alarm.
But Trump has indicated he is ready to escalate the duties further if the countries retaliate.
"Today's tariff announcement is necessary to hold China, Mexico, and Canada accountable for their promises to halt the flood of poisonous drugs into the United States," the White House said in a statement on X on Saturday.
Trump posted on his Truth Social platform: "This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl."
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A tariff is a domestic tax levied on goods as they enter the country, proportional to the value of the import. They are a central part of Trump's economic vision.
He sees them as a way of growing the US economy, protecting jobs and raising tax revenue - and in this case, pushing for policy action.
Together, China, Mexico and Canada accounted for more than 40% of imports into the US last year.
Canada, Mexico and the US have deeply integrated economies, with an estimated $2bn (£1.6bn) worth of manufactured goods crossing the borders daily.
In its announcement, the White House accused Mexico's government of having "an intolerable alliance" with Mexican drug trafficking organisations.
In her response, Mexican President Claudia Sheinbaum called allegations that the Mexican government had alliances with criminal organisations "slander".
Sheinbaum called on the US to do more to clamp down on the illegal flow of guns south to arm the cartels.
Her country is willing to work with the US, she said. "Problems are not resolved by imposing tariffs, but by talking."
She instructed her economy minister to respond with tariff and non-tariff measures, which are expected to include retaliatory tariffs of 25% on US goods into Mexico.
Canada has already announced retaliatory tariffs against the US, with Canadian Prime Minister Justin Trudeau matching the 25% imposed on his country.
He set out "far-reaching" tariffs would affect 155bn Canadian dollars' worth ($106.6bn; £86bn) of American goods ranging from beer and wine, to household appliances and sporting goods.
Non-tariff measures being considered are related to critical minerals and procurement, although Trudeau did not offer more detail.
"We don't want to be here, we didn't ask for this," he said. "But we will not back down in standing up for Canadians."
The Canadian prime minister pushed back on the suggestion the shared border posed a security concern, saying less than 1% of fentanyl going into the US comes from Canada. He also added less than 1% of illegal migrants entered the US through the border.
Canada is America's largest foreign supplier of crude oil. According to the most recent official trade figures, 61% of oil imported into the US between January and November last year came from Canada.
China said it "firmly opposes" the tariffs, but has not yet announced any retaliatory measures. The 10% tax on its imports to the US will be added over and above tariffs already imposed on China by Trump in his first term and by President Joe Biden.
"Trade and tariff wars have no winners," said a spokesperson at China's Washington embassy.
Trump has acknowledged there could be "some temporary, short-term disruption" a as a result of tariffs.
The car manufacturing sector could be especially hard hit. Parts cross the US, Canadian and Mexican borders multiple times before a final vehicle is assembled.
TD Economics suggested the import taxes could push up the average US car price by around $3,000, while the National Homebuilders Association said housing costs could increase.
The Canadian Chamber of Commerce said the levies would have "immediate and direct consequences on Canadian and American livelihoods" and will "drastically increase the cost of everything for everyone".
The Farmers for Free Trade said with many US farmers already struggling, "adding tariffs to the mix would only exacerbate the situation across much of rural America".
But the US Retail Industry Leaders Association, which includes big names such as Home Depot, Target and Walgreens among its more than 200 members, expressed hope tariffs could still be averted.
The White House, explaining on Saturday why it was targeting its top trading partners, said Mexican cartels were responsible for trafficking fentanyl, methamphetamine and other drugs.
It said tariffs on Canada would remain until it "co-operates with the US against drug traffickers and on border security".
Lastly, it said "China plays the central role in the fentanyl crisis" with exports of the lethal synthetic painkiller.
Both the northern and southern US borders have reported drug seizures, though amounts at the border with Canada are considerably lower than those with Mexico, according to official data.
US border agents seized 43lbs (19.5kg) of fentanyl at the northern border between October 2023 and last September, compared to more than 21,000lbs (9,525.4kg) at the southern border.
Still, recent reports from Canadian intelligence agencies suggest a growing number of transnational organised crime groups are manufacturing drugs in Canada.
Ashley Davis, a Republican lobbyist for businesses, who represents major US companies, including Walmart and Boeing, and has been involved in discussions about tariffs, told the BBC's World Business Report she thought Trump would pull back on the tariffs in North America if he could point to progress on the issues he has raised as complaints – especially immigration.
"You have to remember – the border and China are the two biggest issues that Americans voted him on in the elections in November. Anything he can do to claim wins on that, I think he's going to do," she said.