President Donald Trump has confirmed that a 25% tariff on goods imported from Canada and Mexico will go into effect, saying that negotiations had reached their limit.
Alongside this, a 10% tariff on Chinese imports is also expected to take effect, impacting America’s top three trade partners.
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US Markets React to Tariff Announcements
In response to Trump’s comments, U.S. stock markets plummeted. The Dow Jones Industrial Average dropped by 1.4%, the S&P 500 fell 1.75%, and the Nasdaq sank 2.6%.
Trump told reporters at the White House on Monday, "No room left for Mexico or for Canada. The tariffs are all set and will go into effect tomorrow."
Retaliation from Canada, Mexico, and China
Canada immediately vowed to retaliate. Prime Minister Justin Trudeau declared that Canada would not allow this “unjustified decision” to go unchallenged.
Foreign Minister Melanie Joly announced a response of C$155 billion ($107 billion) in tariffs, with an initial $30 billion to be levied on everyday goods such as pasta, clothing, and perfume.
Joly warned that these tariffs posed "an existential threat" to Canadian jobs.
In China, the Ministry of Commerce also condemned the new U.S. tariffs, accusing the Trump administration of attempting to “shift the blame” and “bully” China over fentanyl flows.
China’s state media speculated that Beijing may target U.S. agricultural and food products in retaliation.
Mexico has also pledged to retaliate, raising concerns of a full-blown trade war.
Trump’s Rationale for Tariffs
Trump justified the tariffs by citing the need to address the flow of illegal drugs and immigrants into the U.S.
The tariffs, initially set to begin last month, had been delayed by one month for Canada and Mexico, but now Trump is moving forward with them.
The 10% tariff on Chinese exports was imposed in February, bringing the total tariff on Chinese goods to at least 20%.
Trump has long argued that tariffs are a necessary tool to address trade imbalances and protect U.S. manufacturing, even dismissing concerns that the measures could harm the U.S. economy, especially in North America, where free trade has been the norm for decades.
Diplomatic Tensions Escalate
Diplomatic efforts to prevent the tariffs had been underway, with Canadian and Mexican officials in Washington attempting to reach an agreement.
Mexican President Claudia Sheinbaum reminded Trump that "Mexico has to be respected," stressing that cooperation should not mean subordination.
Meanwhile, Trudeau, attending a summit in the UK, met with King Charles and emphasized the importance of defending Canada’s sovereignty.
Trudeau also reiterated that Canada is not a significant source of illegal fentanyl entering the U.S., citing data that shows only 1% of fentanyl seized in the U.S. originates from Canada.
As tensions rise, the global economy braces for the potential fallout from this escalating trade conflict.
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Written By HowNHowTo.com