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Saturday, March 15, 2025

Trump’s tariffs draw retaliation from Mexico, Canada and China

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10 days ago
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Trucks line up to cross the border into the United States as tariffs against Mexico go into effect, Tuesday, March 4, 2025, in Tijuana, Mexico. (AP Photo/Gregory Bull)

Trucks line up to cross the border into the United States as tariffs against Mexico go into effect, Tuesday, March 4, 2025, in Tijuana, Mexico. (AP Photo/Gregory Bull)

Gregory Bull

Pres­i­dent Don­ald Trump launched a trade war Tues­day against Amer­i­ca’s three biggest trad­ing part­ners, draw­ing im­me­di­ate re­tal­i­a­tion from Mex­i­co, Cana­da and Chi­na and send­ing fi­nan­cial mar­kets in­to a tail­spin as the U.S. faced the threat of rekin­dled in­fla­tion and par­a­lyz­ing un­cer­tain­ty for busi­ness.

Just af­ter mid­night, Trump im­posed 25% tax­es, or tar­iffs, on Mex­i­can and Cana­di­an im­ports, though he lim­it­ed the levy to 10% on Cana­di­an en­er­gy. Trump al­so dou­bled the tar­iff he slapped last month on Chi­nese prod­ucts to 20%.

Bei­jing re­tal­i­at­ed with tar­iffs of up to 15% on a wide ar­ray of U.S. farm ex­ports. It al­so ex­pand­ed the num­ber of U.S. com­pa­nies sub­ject to ex­port con­trols and oth­er re­stric­tions by about two dozen.

In an ad­dress to Con­gress Tues­day night, Trump re­peat­ed two dif­fer­ent ex­pla­na­tions for his tar­iffs on Cana­da and Mex­i­co. He cit­ed the trade deficits the U.S. has with both coun­tries, but al­so said, “they’ve al­lowed fen­tanyl to come in­to our coun­try at lev­els nev­er seen be­fore, killing hun­dreds of thou­sands of our cit­i­zens.”

Trump al­so ac­knowl­edged there could be “a lit­tle dis­tur­bance” from the tar­iffs, a pos­si­ble nod to the stock mar­ket’s sharp falls in the past two days as well as con­cerns about in­fla­tion.

“It may be a lit­tle bit of an ad­just­ment pe­ri­od,” he said af­ter claim­ing that farm­ers would ben­e­fit from rec­i­p­ro­cal tar­iffs on coun­tries that have tar­iffs on U.S. ex­ports. “You have to bear with me again and this will be even bet­ter.”

Cana­di­an Prime Min­is­ter Justin Trudeau said his coun­try would plas­ter tar­iffs on over $100 bil­lion (U.S. dol­lars) of Amer­i­can goods over the course of 21 days.

“To­day the Unit­ed States launched a trade war against Cana­da, their clos­est part­ner and al­ly, their clos­est friend. At the same time, they are talk­ing about work­ing pos­i­tive­ly with Rus­sia, ap­peas­ing Vladimir Putin, a ly­ing, mur­der­ous dic­ta­tor. Make that make sense,” Trudeau said.

Lat­er in the day, Com­merce Sec­re­tary Howard Lut­nick said the U.S. would like­ly meet Cana­da and Mex­i­co “in the mid­dle,” with an an­nounce­ment com­ing as soon as Wednes­day.

Lut­nick told Fox Busi­ness News that the tar­iffs would not be paused, but that Trump would reach a com­pro­mise.

“I think he’s go­ing to fig­ure out, you do more, and I’ll meet you in the mid­dle in some way,” Lut­nick said.

A Cana­di­an se­nior gov­ern­ment of­fi­cial said Lut­nick called On­tario Pre­mier Doug Ford af­ter Ford’s press con­fer­ence and asked him to stand down. The of­fi­cial, who spoke on con­di­tion of anonymi­ty be­cause they were not au­tho­rized to speak pub­licly about the call, said Ford told the U.S. com­merce sec­re­tary he’ll go hard­er.

The of­fi­cial said Lut­nick told Ford that Trudeau’s “very dumb” com­ment and re­marks by oth­er Cana­di­an of­fi­cials were not help­ful, but said Lut­nick seemed to ac­knowl­edge the tar­iffs are a part of ne­go­ti­a­tion to­ward a trade deal.

A se­nior Cana­di­an of­fi­cial said Trudeau told the pre­miers of Cana­da’s provinces that he hopes to speak to Trump on Wednes­day. The of­fi­cial spoke on con­di­tion of anonymi­ty be­cause they were not au­tho­rized to speak pub­licly about the call.

Mex­i­can Pres­i­dent Clau­dia Shein­baum said Mex­i­co will re­spond to the new tax­es with its own re­tal­ia­to­ry tar­iffs. Shein­baum said she will an­nounce the prod­ucts Mex­i­co will tar­get on Sun­day. The de­lay might in­di­cate that Mex­i­co still hopes to de-es­ca­late Trump’s trade war.

Chi­na in­di­cat­ed on Tues­day night that it would not back down.

“If war is what the U.S. wants, be it a tar­iff war, a trade war or any oth­er type of war, we’re ready to fight till the end,” Chi­na’s em­bassy to the Unit­ed States post­ed on X.

The pres­i­dent is aban­don­ing the free trade poli­cies the Unit­ed States pur­sued for decades af­ter World War II. He ar­gues that open trade cost Amer­i­ca mil­lions of fac­to­ry jobs and that tar­iffs are the path to na­tion­al pros­per­i­ty. He re­jects the views of main­stream econ­o­mists who con­tend that such pro­tec­tion­ism is cost­ly and in­ef­fi­cient.

Im­port tax­es are “a very pow­er­ful weapon that politi­cians haven’t used be­cause they were ei­ther dis­hon­est, stu­pid or paid off in some oth­er form,” Trump said Mon­day. “And now we’re us­ing them.”

Dart­mouth Col­lege econ­o­mist Dou­glas Ir­win, au­thor of a 2017 his­to­ry of U.S. tar­iff pol­i­cy, has cal­cu­lat­ed that Tues­day’s hikes will lift Amer­i­ca’s av­er­age tar­iff from 2.4% to 10.5%, the high­est lev­el since the 1940s. “We’re in a new era for sure.”

As the trade dis­putes es­ca­lat­ed, stocks racked up more loss­es Tues­day on Wall Street, wip­ing out all the gains since Elec­tion Day for the S&P 500. Mar­kets in Eu­rope al­so fell sharply.

The Amer­i­can pres­i­dent has in­ject­ed a dis­ori­ent­ing volatil­i­ty in­to the world econ­o­my, leav­ing it off bal­ance as peo­ple won­der what he will do next.

Dur­ing his first term, Trump im­posed tar­iffs on­ly af­ter lengthy in­ves­ti­ga­tions — in­to the na­tion­al se­cu­ri­ty im­pli­ca­tions of re­ly­ing on for­eign steel, for ex­am­ple, said Michael House, co-chair of the in­ter­na­tion­al trade prac­tice at the Perkins Coie law firm.

But by de­clar­ing a na­tion­al emer­gency in­volv­ing the flow of im­mi­grants and il­lic­it drugs across U.S. bor­ders, “he can mod­i­fy these tar­iffs with a stroke of the pen,’’ House said. “It’s chaot­ic.”

De­mo­c­ra­t­ic law­mak­ers were quick to crit­i­cize the tar­iffs.

“Pres­i­dents don’t get to in­vent emer­gen­cies to jus­ti­fy bad poli­cies,” said Rep. Gre­go­ry Meeks, the top De­mo­c­rat on the House For­eign Af­fairs Com­mit­tee. “Abus­ing emer­gency pow­ers to wage an eco­nom­ic war on our clos­est al­lies isn’t lead­er­ship — it’s dan­ger­ous.”

Even some Re­pub­li­can sen­a­tors raised alarms. “Maine and Cana­da’s econ­o­my are in­te­grat­ed,” said Sen. Su­san Collins, R-Maine, ex­plain­ing that much of the state’s lob­sters and blue­ber­ries are processed in Cana­da and then sent back to the U.S.

Truck dri­ver Car­los Ponce, 58, went about busi­ness as usu­al Tues­day morn­ing, trans­port­ing au­to parts from Ciu­dad Juarez, Mex­i­co, to El Pa­so, Texas, just as he’s done for decades.

Like many on the bor­der, he was wor­ried about the fall­out from the tar­iffs. “Things could change dras­ti­cal­ly,” Ponce said. Truck­ers could lose their jobs or have to dri­ve far­ther to coastal ports as Mex­i­can man­u­fac­tur­ers look for trad­ing part­ners be­yond the U.S.

Alan Rus­sell, head of Tec­ma, which helps fac­to­ries set up in places like Ciu­dad Juarez, is skep­ti­cal that Trump’s tar­iffs will bring man­u­fac­tur­ing back to the Unit­ed States.

“No­body is go­ing to move their fac­to­ry un­til they have cer­tain­ty,” Rus­sell said. Just last week, he said, Tec­ma helped a North Car­oli­na man­u­fac­tur­er that moved to Mex­i­co be­cause it couldn’t find enough work­ers in the Unit­ed States.

U.S. busi­ness­es near the Cana­di­an bor­der scram­bled to deal with the im­pact. Gutherie Lum­ber in sub­ur­ban De­troit reached out Tues­day to Cana­di­an sup­pli­ers about the cost of 8-foot wood studs. About 15% of the lum­ber at the Gutherie yard in Livo­nia, Michi­gan, comes from Cana­da.

Sales man­ag­er Mike Ma­honey said Cana­di­an sup­pli­ers are al­ready rais­ing prices. “They’re putting that 25% on studs.’' Builders will strain to stay with­in their bud­gets.

Af­ter years of ef­fort and thou­sands of dol­lars in in­vest­ment, Tom Bard, a Ken­tucky craft bour­bon dis­tiller, gained a foothold in the Cana­di­an provinces of British Co­lum­bia and Al­ber­ta and watched his sales grow north of the bor­der. Now Ken­tucky bour­bon is in Cana­da’s crosshairs, and an or­der from his Cana­di­an dis­trib­u­tors is on hold.

“That hurts,” he said. At his small dis­tillery “every sin­gle pal­let that goes out the door makes a huge dif­fer­ence … The last thing you want is to have an emp­ty spot where your bot­tles are sup­posed to be on a shelf.”

Bard co-owns the Bard Dis­tillery with his wife, Kim, in west­ern Ken­tucky’s Muh­len­berg Coun­ty, about 135 miles (217 kilo­me­tres) south­west of Louisville, Ken­tucky.

Trump over­whelm­ing­ly car­ried Ken­tucky in the No­vem­ber elec­tion. In Muh­len­berg Coun­ty, Trump de­feat­ed Ka­mala Har­ris by a more than 3-to-1 mar­gin.

The Chi­na tar­iffs al­so threat­en the U.S. toy in­dus­try. Greg Ahearn, pres­i­dent and CEO of the Toy As­so­ci­a­tion, said the 20% tar­iffs on Chi­nese goods will be “crip­pling,” as near­ly 80% of toys sold in the U.S. are made in Chi­na.

Rachel Lutz owns the Pea­cock Room, four women’s bou­tique shops with about 15 em­ploy­ees in De­troit. She’s been brac­ing for the tar­iffs but doesn’t un­der­stand the log­ic be­hind them.

“I’m strug­gling to see the wis­dom in pick­ing a fight with our largest trad­ing part­ner that we’ve had his­tor­i­cal­ly won­der­ful re­la­tion­ships with,” Lutz said Tues­day from her shop. “I’m strug­gling to re­al­ly un­der­stand how they can’t see that will pro­found­ly im­pact our econ­o­my in ways that I think the Amer­i­can con­sumer has not pre­dict­ed. We’re about to find out.”

Gillies re­port­ed from Toron­to. As­so­ci­at­ed Press writ­ers Anne D’In­no­cen­zio in New York; Corey Williams in De­troit; Bruce Schrein­er in Louisville, Ken­tucky; Christo­pher Ru­gaber, Di­di Tang and Lisa Mas­caro in Wash­ing­ton; and Megan Janet­sky and Maria Verza in Mex­i­co City con­tributed to this re­port.

WASH­ING­TON (AP) —

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