Trump confirms 25% tariffs on Canada and Mexico, doubles levy on China
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US President Donald Trump speaks to reporters in the Roosevelt Room of the White House on March 3.
PHOTO: DOUG MILLS/NYTIMES
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WASHINGTON - US President Donald Trump said 25 per cent tariffs on goods from Mexico and Canada would take effect on March 4, pushing North America closer to a regional trade war and sending financial markets reeling.
Mr Trump’s comments on March 3 triggered a sell-off in global stocks and pushed bond yields lower. The Mexican peso and Canadian dollar both fell following his remarks.
“They are going to have to have a tariff. 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,” Mr Trump said at the White House.
He said there was “no room left” for a deal that would avert the tariffs by curbing fentanyl flows into the US.
Mr Trump also reaffirmed that he will increase tariffs on all Chinese imports to 20 per cent from the previous 10 per cent levy to punish Beijing for failing to halt shipments of fentanyl to the U.S.
The president said in an order that China “has not taken adequate steps to alleviate the illicit drug crisis”.
Chief executives and economists say Mr Trump’s tariffs on Canada and Mexico, covering more than US$900 billion (S$1.2 trillion) worth of annual US imports, will deal a serious setback to the highly integrated North American economy.
The tariffs were scheduled to take effect at 12.01am Eastern Time (1.01pm, Singapore time) on March 4, the Trump administration confirmed in Federal Register notices. At that point, the US Customs and Border Protection agency will begin collecting 25 per cent on Canadian and Mexican goods, with a 10 per cent duty for Canadian energy.
The additional Chinese tariffs will also kick in at that deadline.
Canada said it would retaliate with 25 per cent tariffs on C$155 billion (S$144 billion) worth of US goods if Mr Trump’s tariffs went into effect, Prime Minister Justin Trudeau said on March 3, and urged the White House to reconsider.
Mr Trudeau said Canadian tariffs will go into effect for C$30 billion of products at the same time as US tariffs on March 4, while duties on the remaining C$125 billion of US goods will apply in 21 days.
“Our tariffs will remain in place until the US trade action is withdrawn, and should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Mr Trudeau said in a statement.
Mexico’s Economy Ministry said that there would be no public response until President Claudia Sheinbaum’s regular morning press conference on March 4. She has vowed to respond, saying: “We have a plan B, C, D.”
Ontario Premier Doug Ford told NBC that the US tariffs and Canada’s retaliation would be “an absolute disaster” for both countries.
“I don’t want to respond, but we will respond like they have never seen before,” Mr Ford said, adding that Michigan auto plants would likely shut down within a week and that he would halt nickel shipments and cross-border transmission of electricity from Ontario to the US.
“I am going after absolutely everything,” Mr Ford said.
China’s Commerce Ministry on March 4 vowed countermeasures against Washington’s decision and urged the US to “immediately withdraw” its tariffs, which it described as “unreasonable and groundless, harmful to others”.
The state-backed Global Times newspaper earlier said Beijing’s countermeasures would most likely target US agricultural and food products.
The Dow Jones Industrial Average fell 649.67 points, or 1.48 per cent, the S&P 500 lost 104.78 points, or 1.76 per cent, and the Nasdaq Composite dropped 497.09 points, or 2.64 per cent.
Automaker shares fell sharply, with General Motors, which has significant truck production in Mexico, down 4 per cent and Ford falling 1.7 per cent.
Cornell University public policy professor Gustavo Flores-Macias said consumers could see price hikes within days.
“The automobile sector, in particular, is likely to see considerable negative consequences, not only because of the disruption of the supply chains that criss-cross the three countries in the manufacturing process, but also because of the expected increase in the price of vehicles, which can dampen demand,” he said.
Mr Trump’s doubling down on tariffs on Canadian, Mexican and Chinese imports has already drawn industry pushback.
The US-China Business Council, a group of around 270 American companies that do business in China, warned in a statement that sweeping tariffs would hurt US companies, consumers and farmers “and undermine our global competitiveness”.
“Any use of tariffs should be strategic and targeted, focusing on specific US national security goals and unfair Chinese economic practices,” the council’s president Sean Stein said.
The National Retail Federation, meanwhile, warned that as long as tariffs on Canada and Mexico are in place, “Americans will be forced to pay higher prices on household goods”.
Mexico’s response plans
Mexico, after avoiding the first round of Mr Trump’s tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.
According to the Centres for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the US, chiefly from fentanyl.
Representative Suzan DelBene, a Democrat from the state of Washington, said the decision to proceed with tariffs on Canada and Mexico would cost American families thousands of dollars at the grocery store, gas station and pharmacy counter.
“No president should be able to raise taxes without a vote in Congress,” she said in a statement.
White House trade adviser Peter Navarro, however, said on March 4 that the inflationary impact from any tariffs would be “second-order small” and that he did not expect the President to waver on the measures.
“This is the path that he has chosen,” Mr Navarro told CNBC.
Mr Trump on March 1 added another trade action
During the prior week, Mr Trump ordered the revival of a tariff probe on countries that levy digital services taxes, proposed fees of up to US$1.5 million every time a Chinese-built ship enters a US port
These come in addition to his plans to determine higher US “reciprocal tariffs” to match the tariff rates of other countries and offset their other trade barriers, a move that could hit the European Union hard over the value added taxes charged by EU countries.
But Mr Trump’s “tariffs on steroids” agenda may keep inflation higher and could tip the global economy into recession, warned Dr Desmond Lachman, a senior fellow at the conservative American Enterprise Institute. REUTERS, BLOOMBERG, AFP
