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Mexico, Canada hit back at US with counter tariffs: What we know so far
Donald Trump's trade war: Canada and Mexico responded to US President Donald Trump's decision to implement a “25% tariff on imports from Mexico and Canada (10% on Canadian Energy).”
Mexico’s President Claudia Sheinbaum ordered retaliatory tariffs against the US’s promised 25 percent levies on Sunday. Meanwhile, Canadian Prime Minister Justin Trudeau said Canada will place 25% tariffs on $155 billion in US imports in retaliation for Trump tariffs.
Canada and Mexico responded to US President Donald Trump's decision to implement a "25% tariff on imports from Mexico and Canada (10% on Canadian Energy)." This meant that energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10% rate.
"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," Trump said in a post on Truth social.
Trump also imposed tariffs on China. The tariffs would go into effect on Tuesday. His order includes a mechanism to escalate the rates if the countries retaliate against the US, the Associated Press reported.
What did Mexico say?
Mexico's President Sheinbaum immediately ordered retaliatory tariffs. She rejected Washington's accusation that her government has an alliance with drug trafficking groups as "slander."
Responding on X, Mexican President Claudia Sheinbaum said, “We categorically reject the White House’s slander that the Mexican government has alliances with criminal organizations, as well as any intention of meddling in our territory.”
“If the United States government and its agencies wanted to address the serious fentanyl consumption in their country, they could fight the sale of drugs on the streets of their major cities, which they don’t do and the laundering of money that this illegal activity generates that has done so much harm to its population.”
What did Canada say?
Canadian Prime Minister Justin Trudeau said on Saturday Canada would impose 25% tariffs on C$155 billion ($106.5 billion) of US goods in response to US tariffs.
The first round of tariffs would target Can$30 billion worth of US goods on Tuesday followed by further tariffs on Can$125 billion worth of products in three weeks. "C$30 billion would take effect from Tuesday and C$125 billion in 21 days," Trudeau told a news conference.
Trudeau said that like the American tariffs, Canada's response will also be “far-reaching and include everyday items such as American beer, wine...fruits and fruit juices including orange juice, along with vegetables, perfumes, clothing and shoes.”
“It will include major consumer products like household appliances, furniture and sports equipment; and materials like lumber and plastics, along with much, much more,” he added.
Several non-tariff measures were also announced, including some relating to critical minerals, procurement and energy.
Earlier in a post on X, Trudeau said, “We did not want this, but Canada is prepared."
What could Trump's tariffs mean?
A new analysis by the Budget Lab at Yale laid out the possible damage to the US economy. It stated that the average US household would lose the equivalent of $1,170 in income from the taxes.
Economic growth would slow and inflation would worsen — and the situation could be worse if Canada, Mexico and China retaliate, the Associated Press reported.
The report added that the decision throws the global economy and Trump's own political mandate to combat inflation into possible turmoil, though the Republican president posted on social media that it was necessary “to protect Americans.”
The tariffs risk an economic standoff with America's two largest trading partners in Mexico and Canada, upending a decades-old trade relationship with the possibility of harsh reprisals by those two nations.
The tariffs also if sustained could cause inflation to significantly worsen, possibly eroding voters' trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.
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First Published:2 Feb 2025, 08:13 AM IST
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