MEXICO CITY — Mexico and Canada vowed retaliation for sweeping tariffs imposed Tuesday by President Trump on all goods from their countries, a move that overnight upended free trade in North America and sent shock waves through the global supply chain.
As of midnight Tuesday, the U.S. was expected to start levying a 25% tax on all products from Mexico and Canada, with the exception of Canadian oil and gas, which will be subject to 10% tariffs.
Canadian Prime Minister Justin Trudeau announced that his country was striking back immediately with 25% tariffs on $20 billion of U.S. goods produced in Republican-controlled states. A second, broader round of tariffs could be imposed in three weeks’ time, he said.
China retaliated on Tuesday by announcing broad new tariffs on U.S. agricultural, dairy and meat products.
Mexican President Claudia Sheinbaum said Tuesday that Mexico will retaliate with its own set of tariffs — but said she will hold off on announcing which products Mexico plans to target until a public event Sunday in Mexico City’s central plaza. Her response suggested that Mexico, whose economy is highly dependent on the United States, still hopes to avert a full-blown trade war, and she told reporters Tuesday that she hopes to speak with Trump in the coming days.
“There is no motive, reason or justification that supports this decision that will affect our people and our nations,” she said at her daily news conference.
Trump’s tariffs, which also include a new 10% tax on imports from China, threaten to upend the global economy and were expected to drive up prices for U.S. consumers, with some effects being felt almost immediately.
The three countries are the top trading partners of the United States, accounting for more than 40% of all U.S. imports. They supply the U.S. with food, medicine, cars, timber and electronics.
Experts say American consumers will likely find higher prices for fresh vegetables, fruits and other perishable imports in a matter of days.
For other products, prices may start to increase only as inventories are depleted. Car prices will almost surely rise. U.S. auto manufacturing is deeply intertwined with Mexico and Canada, with parts crossing the border many times. Now, those parts will be taxed 25% every time they enter the U.S.
Gas prices are also likely to rise, particularly in the Great Lakes and Rocky Mountain West, which depend on Canadian oil.
The new 10% tariffs on China add to duties that Trump imposed on Chinese imports last month, and during his first term. They are expected to hit American households because China is a big supplier of a broad range of consumer items.
The tariffs against Canada and Mexico upend a trade pact that dates back three decades and has led to tightly integrated industries across North America. Trump himself negotiated and signed the newest version of the accord, which he praised as “the fairest, most balanced and beneficial trade agreement we have ever signed into law.”
Trump has said the tariffs are designed to rebalance trade with the countries, each of which sends more goods to the U.S. than it receives. “Come make your product in America,” he told companies in a speech at the World Economic Forum earlier this year. If not, he said, “then very simply you will have to pay a tariff.”
But he has also used them as a tool to demand that Canada, Mexico and China do more to stop drug trafficking and curb immigration.
Sheinbaum, in her news conference, highlighted all that Mexico has done on those issues. The country, she said, has helped bring illegal border crossings to some of the lowest levels seen in years. At the same time, Mexico has increased fentanyl seizures, she said.
Last week, as U.S. and Mexican security leaders met in Washington, Mexico transferred to the United States 29 drug trafficking suspects, including Rafael Caro Quintero, the alleged mastermind of the 1985 slaying of Enrique Camarena, an undercover U.S. Drug Enforcement Administration agent in Mexico.
The tariffs threaten to deeply disrupt the economies of all three countries, although Mexico is likely to be the hardest hit.
The value of Mexico’s exports and imports amounts to almost 90% of the country’s gross domestic product, according to World Bank data. Economists warn that even a small increase in tariffs on goods destined for the U.S. poses serious risks for the economy.
The mere threat of tariffs has already scared off foreign companies from investing in Mexico. The country’s economy is already on shaky ground. Mexico faces its largest budget deficit since the 1980s.
Analysts say that if tariffs drag down the Mexican economy, more Mexican workers without proper documentation will seek to enter the U.S.
A U.S. president can impose new import taxes without approval from Congress by invoking the International Emergency Economic Powers Act, which authorizes executive action to counter threats to national security, foreign policy or the economy.
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