Josh Balk, Paul Wiseman, Rob Zillies, The Associated Press
WASHINGTON (AP) — President Donald Trump’s long-standing tariffs on Canada and Mexico came into effect Tuesday, setting up costly retaliation by US North American allies.
Starting just after midnight, imports from Canada and Mexico are currently taxed at 25%, while Canadian energy products are subject to 10% import operations.
The 10% tariff Trump imposed on Chinese imports in February doubled to 20%, with Beijing retaliating on Tuesday with tariffs of up to 15% on a wide array of US farm exports. It also expanded the number of US companies to make controls and other restrictions about 20 times.
Canadian Prime Minister Justin Trudeau said his country will slap tariffs on more than $100 billion in American goods over 21 days. Mexico did not immediately detail retaliatory measures.
Following Canada and China, Mexican President Claudia Sheinbaum said Tuesday that Mexico will respond to a 25% tariff imposed on US goods through its own retaliatory tariffs.
Sheinbaum said it will unveil the products that Mexico will target on Sunday at a public event at Mexico City’s Central Plaza.
The US president’s move sparked fears about higher inflation and the prospect of a trade war, despite his promise to the American people that taxing imports was the easiest path to prosperity for the nation. He expressed his willingness to defy the warnings of mainstream economists, and posted his own public approval on the boundaries, believing that tariffs could be corrected what plagued the country.
“It’s a very powerful weapon that politicians aren’t using because they’re either cheating, stupid or otherwise rewarded,” Trump told the White House on Monday. “And now we’re using them.”
The US market fell sharply on Monday after Trump said there was “no room” for negotiations that could lower tariffs. European and Asian stocks were almost low on Tuesday after they were enacted.
Tariffs in Canada and Mexico were to begin in February, but Trump agreed to a 30-day suspension and negotiated further with two of its biggest US trading partners. The reason for the tariffs stated is to address drug trafficking and illegal immigration, and both countries say they have made progress on these issues. But Trump also said tariffs would fall only if the US trade imbalances close. This is a process that is unlikely to be resolved to a political timeline.
If the US economy is struggling, tariffs can be short-lived. But Trump could also impose tariffs on the European Union, India, computer chips, cars and pharmaceutical drugs. The US president is injecting confused volatility into the global economy and leaving a balance as he wonders what people will do next.
“It’s confusing, especially compared to the way we saw tariffs roll out in the first (Trump) administration,” said Michael House, co-chair of international trade practices at Perkins Coie Law Firm. “It’s unpredictable. In fact, we don’t know what the president will do.”
Democrats quickly criticised tariffs, and even Republican senators raised alarms.
R-Maine Sen. Susan Collins said she is “very worried” about the tariffs that will come into effect due to her proximity to Canada.
“The economy of Maine and Canada are integrated,” Collins said, explaining that much of the state’s lobster and blueberries will be processed in Canada and then sent back to the US.
The world economy is now caught up in the mist of what looks like a trade war.
Even after Trump announced tariffs were on Monday, Canadian officials were still in touch with their US counterparts.
“The dialogue will continue, but we are ready to respond,” the Canadian Defense Minister attended a special cabinet meeting in Ottawa on US-Canadian relations. “There’s still discussion going on.”
Shortly after Blair speaks, Trudeau says Canada will impose a 25% tariff on US goods worth $100 billion, earning the remaining amount of American goods after three weeks from tariffs on US-valued goods worth $21 billion.
“Our tariffs will be in place until US trade measures are withdrawn, and if US tariffs do not cease, we are actively and continuing discussions with the states and the territories to pursue some non-tariff measures,” Trudeau said.
The White House wants to see a decline in fentanyl seizures in the United States, not just in the northern and southern borders. Management officials say fentanyl attacks last month were linked to foreign cartels everywhere from Louisiana to New Jersey.
Damon Pike, a technical practice leader in customs and trade services at tax and consulting firm BDO, suggested that other countries’ responses could escalate trade tensions and possibly increase economic pressure.
“The Canadian list is ready,” Pike said. “The EU list is ready. It will be TIT for TAT.”
Tim Houston, leader of the Atlantic province of Nova Scotia, Canada, said he would direct the Nova Scotia Liquor Corporation to remove all alcohol from the storefront. Houston also said his government would limit American businesses’ access to procurement in the state, and double the cost of commercial vehicles from the US on paid highways.
The Trump administration has suggested that inflation is not as bad as economists claim, and that tariffs will motivate foreign companies to open factories in the United States. Trump announced Monday that the Taiwanese semiconductor manufacturer, a computer chip maker, will invest $100 billion in domestic production.
Still, it can take time to move factories across the world and train workers with the skills they need.
Greg Ahearn, president and CEO of Toy Association, said that 20% tariffs on Chinese products are “crippled” because nearly 80% of toys sold in the US are made in China.
“There’s manufacturing, there’s refinement in tools,” he said. “There are many handmade items that are part of these toys that many don’t understand. There are face painting, face masks, hair, hair braids, stuffed toys for cutting and sewing. These are all very high hands and skilled workers who have gone through the generation of supply chains that exist in China.”
For the president who promised a quick outcome, Ahearn added a note on how quickly US factories match their Chinese rivals.
“It can’t be replicated overnight,” he said.
Gillies was reported from Toronto. Anne D’Nynenzio, authors of Apsacage Press in New York, and Lisa Mascaro in Washington, and Maria Versa in Mexico City, contributed to this report.
Original issue: March 4th, 2025 9:35am EST
