US President Donald Trump on Saturday signed an order imposing hefty new tariffs of 25 per cent on goods from Mexico and Canada and 10 per cent on imports from China, threatening to ignite a trade war that could disrupt more than $2.1 trillion of annual trade.
Trump has declared a national emergency under the International Emergency Economic Powers Act to back the tariffs, which allows sweeping powers to address crises. The revised tariff collections are set to begin at 12.01 am on Tuesday, according to the order.
Fulfilling his campaign promise but potentially driving up prices for American consumers, Trump calls the move a strategy to pressure countries into curbing illegal immigration and the smuggling of chemicals used in fentanyl production, while also boosting domestic manufacturing and increasing federal revenue.
“This was done because of the major threat of illegal aliens and deadly drugs killing our citizens, including fentanyl. We need to protect Americans, and it is my duty as President to ensure the safety of all,” Trump said after signing the order.
While energy products from Canada will have only a 10 per cent duty, Mexican energy imports will be charged the full 25 per cent, the White House officials told reporters. Additionally, for Canada, they said the “de minimis” US tariff exemption for small shipments under $800 would be cancelled.
The White House, said there would be no exclusions from the tariffs and noted that the order includes a mechanism to escalate the rates if the countries retaliate against the US, as they have threatened.
“President Trump is implementing a 25 per cent tariff to be paid for by Mexican producers until Mexico cooperates with the US in the fight against drugs…. President Trump is implementing a 25 per cent tariff on Canadian goods and a 10 per cent tariff on Canadian energy resources until Canada cooperates with the US against drug traffickers and on border security,” the White House statement said.
It added, “President Trump is implementing a 10 per cent tariff on China until we secure the full cooperation of the Chinese government in the fight against fentanyl. China plays the central role in the fentanyl crisis that is destroying American lives”.
RETALIATION LIKELY
Trump’s move is expected to draw retaliatory tariffs, potentially disrupting more than $2.1 trillion in annual two-way US trade with its top three trading partners. Canada and Mexico had threatened retaliation, while China also stated that it would defend its trade interests.
Responding to Trump’s order, Canadian Prime Minister Justin Trudeau criticised the move, saying that his country did not want this to happen but was prepared to face it.
“The United States has confirmed that it intends to impose 25 per cent tariffs on most Canadian goods, with 10 per cent tariffs on energy, starting February 4. I’ve met with the Premiers and our Cabinet today, and I’ll be speaking with President Sheinbaum of Mexico shortly. We did not want this, but Canada is prepared. I’ll be addressing Canadians later this evening,” Trudeau tweeted.
Ottawa has drawn up detailed targets for immediate retaliation, including duties on Florida orange juice, a source familiar with the plan said. Its broader list of targets could cover $103 billion worth of US imports, but it will hold public consultations before acting, sources said to news agency Reuters.
Mexican President Claudia Sheinbaum has also threatened retaliation, but said she would “wait with a cool head” for Trump’s decision and was prepared to continue a border dialogue with him.
China also vowed to defend its trade interests, though it has been more circumspect. A spokesperson for Beijing’s embassy in Washington said: “There is no winner in a trade war or tariff war, which serves the interests of neither side nor the world”.
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