Trade wars erupt as Trump hits Canada, Mexico, China with steep tariffs
Trump imposed new 25% tariffs on imports from Mexico and Canada along with a doubling of duties on Chinese goods to 20%
US PRESIDENT Donald Trump’s new 25 per cent tariffs on imports from Mexico and Canada took effect on Tuesday (Mar 4), along with a doubling of duties on Chinese goods to 20 per cent, launching new trade conflicts with the top three US trading partners.
The tariff actions, which could upend nearly US$2.2 trillion in two-way annual US trade went, live at 12.01 am in Washington (1.01 pm, Singapore time), hours after Trump declared that all three countries had failed to do enough to stem the flow of the deadly fentanyl opioid and its precursor chemicals into the US.
China responded immediately after the deadline, announcing additional tariffs of 10 to 15 per cent on certain US imports from Mar 10 and a series of new export restrictions for designated US entities.
Canada and Mexico, which have enjoyed a virtually tariff-free trading relationship with the US for three decades, were poised to immediately retaliate against their long-time ally.
Canadian Prime Minister Justin Trudeau said that Ottawa was launching 25 per cent tariffs on C$30 billion (S$27.8 billion) worth of US imports, including orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.
Trudeau added that Canada would slap tariffs on another C$125 billion of US imports if Trump’s tariffs were still in place in 21 days.
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Consultation over these produce were still taking place, but they are expected to include vehicles, steel, aircraft, fruits and vegetables, beef and pork.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.
Mexican President Claudia Sheinbaum said on Tuesday that there was “no reason, rationale or justification” for Trump’s actions after Mexico took “decisive actions” against organised crime and fentanyl trafficking.
She vowed retaliation and said she would announce Mexico’s response at an event on Sunday in Mexico City.
The extra 10 per cent duty on Chinese goods adds to a 10 per cent tariff imposed by Trump on Feb 4 to punish Beijing over the US fentanyl overdose crisis.
The cumulative 20 per cent duty also comes on top of tariffs of up to 25 per cent imposed by Trump during his first term on some US$370 billion worth of US imports.
Some of these products saw US tariffs increase sharply under former president Joe Biden last year, including a doubling of duties on Chinese semiconductors to 50 per cent and a quadrupling of tariffs on Chinese electric vehicles to over 100 per cent.
The 20 per cent tariff will apply to several major US consumer electronics imports from China previously untouched by prior duties, including smartphones, laptops, video game consoles, smartwatches and speakers and Bluetooth devices.
China’s new tariffs announced on Tuesday targeted a wide range of US agricultural products including certain meats, grains, cotton, fruit, vegetables and dairy products.
Beijing also placed 25 US firms under export and investment restrictions on national security grounds. Ten of these firms were targeted for selling arms to Taiwan.
China’s commerce ministry said that the US tariffs violated World Trade Organization rules and “undermine the basis for economic and trade cooperation between China and the US”.
US farmers were hard-hit by Trump’s first-term trade wars, which cost them about US$27 billion in lost export sales and conceded share of the Chinese market to Brazil.
The tariffs on Mexican and Canadian products could have much deeper repercussions for a highly integrated North American economy that depends on cross-border shipments to build cars and machinery, refine energy and process agricultural goods.
“Today’s reckless decision by the US administration is forcing Canada and the US towards recessions, job losses and economic disaster,” Canadian Chamber of Commerce CEO Candace Laing said.
She added that the US tariffs will fail to usher in a “golden age” coveted by Trump, but instead raise costs for consumers and producers and disrupt supply chains. “Tariffs are a tax on the American people.”
Matt Blunt, president of the American Automotive Policy Council representing Detroit automakers, called for vehicles that meet the US-Mexico-Canada Agreement’s regional content requirements to be exempted from the tariffs.
Even before Trump’s tariffs announcement, US data on Monday showed factory gate prices jumped to a nearly three-year high, suggesting that a new wave of tariffs could soon undercut production.
Trump’s confirmation that the tariffs would proceed sent financial markets reeling, with global stocks tumbling and safe-haven bonds rallying. Both the Canadian dollar and Mexican peso fell against the greenback.
Trump has maintained a blistering pace of tariff actions since taking office in January, including fully restored 25 per cent tariffs on steel and aluminium imports that take effect Mar 12, rescinding prior exemptions.
Trump’s “America First” agenda, aimed at redrawing trade relationships in favour of the US, was expected to be a centrepiece of his Tuesday night address to a joint session of Congress.
Trump on Saturday opened a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5 per cent US tariffs on softwood lumber, would be hit particularly hard.
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