Americans awoke Tuesday morning to an escalating trade war, with President Trump imposing new tariffs on Canadian, Mexican, and Chinese imports, and those countries quickly retaliated.
The Trump administration imposed tariffs of 25% on most Canadian and Mexican imports, as well as a new 10% tariff on Chinese imports.
In retaliation, Canada imposed 25% tariffs on $30 billion in goods shortly after midnight, without specifying which products were included.
“Our tariffs will remain in place until the US trade action is withdrawn, and if the US tariffs are not lifted, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Canadian Prime Minister Justin Trudeau said in a statement late Monday.
“While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal,” the previous Canadian prime minister stated.
Mexico is expected to announce tariffs on US goods later Tuesday.
According to The Associated Press, China plans to impose 15% tariffs on chicken, wheat, corn, and cotton imports from the United States, as well as 10% tariffs on sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products.
On Tuesday, Beijing added 15 US companies to its list of untrustworthy entities, which could prevent them from engaging in China-related import or export activities or making new investments in the country.
“China has decided to include 15 U.S. entities that endanger China’s national security and interests in the export control list, prohibiting the export of dual-use items to them,” China’s Commerce Ministry stated.
Trump had previously threatened but then backtracked on tariffs, but in this case he kept his word despite a sharply negative reaction from the stock market.
The S&P 500 fell 1.76 percent on Monday, the most since December of last year. The Dow Jones dropped nearly 650 points, while the Nasdaq Composite fell 2.64 percent as Nvidia stock fell nearly 9 percent.
Ford and General Motors’ stocks also fell on Monday.
The president is scheduled to address a joint session of Congress on Tuesday evening, where he will be expected to defend his trade policies.
Trump said Monday that “vast amounts of fentanyl were poured into our country,” primarily through Mexico and China, and suggested that automakers build factories in the United States to successfully avoid the levies.
“So, what they have to do is build their car plants, frankly, and other things in the United States, in which case, they have no tariffs,” he said.
Trump has claimed that by imposing tariffs on Canada and Mexico, he is attempting to combat the illegal entry of fentanyl while also attempting to make a trade system that he claims penalizes the United States more equitable.
However, Canada and Mexico argue that they are taking steps to prevent illegal drugs from crossing the border, and that Trump’s actions punish long-time US allies while violating previous trade agreements.
It is unclear where the trade war will go next, but Ontario Premier Doug Ford said Monday he is ready to cut off electricity exports to the United States if Trump’s 25% tariffs on Canadian goods are implemented.
“If they want to annihilate Ontario, I will do everything — even cut off their energy with a smile on my face,” Ford told reporters at a mining convention in downtown Toronto, according to the Toronto Sun.