New tariffs of 25% on imports from Mexico and Canada and a doubling of duties on Chinese goods (20%), imposed by US President Donald Trump, came into effect on Tuesday, the 4th of March, sparking new trade conflicts with the three main US trading partners, reports Reuters.
Trump said on Monday night that Mexico and Canada had no chance of reaching a deal to avoid the tariffs.
The tariffs, which will affect annual US trade of around 2.2 trillion US dollars, started just after midnight, shortly after Trump said that the three countries had not done enough to stop the import of fentanyl and its chemicals into the US.
The additional 10% duty on Chinese goods is on top of the 10% tariff Trump imposed on the 4th of February to punish Beijing for the fentanyl overdose crisis in the US. The new tariffs are in addition to those imposed during Trump’s first term in office. Last year, US tariffs on some of these products were sharply increased, including to 50% of duties on Chinese semiconductors and a more than 100% increase in tariffs on Chinese electric vehicles.
THE NEW 20% TARIFF NOW ALSO APPLIES TO KEY ELECTRONIC GOODS SUCH AS SMARTPHONES, LAPTOPS AND GAMES CONSOLES.
China reacted immediately after the implementation by announcing that it would impose additional tariffs of 10-15% on certain US imports from the 10th of March and a series of new export restrictions on certain US entities.
China’s new tariffs target a wide range of US agricultural products, including some meat, cereals, cotton, fruit, vegetables and dairy products.
Beijing also imposed export and investment restrictions on 25 US companies on national security grounds. Ten of these companies were taxed for arms sales to Taiwan.
China’s Ministry of Commerce said the US tariffs violate World Trade Organisation rules and “undermine the foundation of economic and trade cooperation between China and the US”.
Canada and Mexico, which have had a virtually tariff-free trade relationship with the US for three decades, were also ready to take immediate retaliatory measures.
Canadian Prime Minister Justin Trudeau announced that Ottawa would respond immediately with 25% tariffs on a large share of US imports and would impose even higher tariffs if Trump’s tariffs remain in place after 21 days. Earlier, he announced that Canada would target American beer, wine, bourbon, home appliances and Florida orange juice.
“TARIFFS WILL DISRUPT AN INCREDIBLY SUCCESSFUL TRADE RELATIONSHIP,” SAID TRUDEAU, ADDING THAT THEY WOULD VIOLATE THE US-MEXICO-CANADA FREE TRADE AGREEMENT THAT TRUMP SIGNED DURING HIS FIRST TERM.
Mexican President Claudia Sheinbaum will announce her response on Tuesday, the country’s economy ministry said.
Tariffs on Mexican and Canadian products could have far-reaching consequences for the tightly integrated North American economy, which depends on cross-border shipments to manufacture cars and machinery, refine energy and process agricultural goods.
“Today’s reckless decision by the US administration is pushing Canada and the US towards recession, job losses and economic disaster,” Candace Laing, executive director of the Canadian Chamber of Commerce, said in a statement.
She said the US tariffs will not usher in the “golden age” envisioned by Trump, but will instead increase costs for consumers and producers and disrupt supply chains. “Tariffs are a tax on the American people.”
News of the tariffs sent shockwaves through the markets, causing global stocks to fall, bonds to rise and Canadian and Mexican currencies to depreciate.