Trump administration unleashes tariffs on Canada, Mexico, and China

President Donald Trump is placing heavy tariffs on key US trading partners Canada, Mexico, and China, but lowering the rate on Canadian energy imports, the White House announced Saturday.

Canadian and Mexican exports to the United States will suffer a 25% tax, while Canadian energy resources would face a 10% charge.

The White House said that Chinese goods, which are currently subject to different tariffs, will face an extra 10% duty.

A Canadian government source told AFP that Washington had previously informed Ottawa that wide tariffs on its exports would begin on Tuesday.

Trump is invoking the International Emergency Economic Powers Act in imposing the tariffs, with the White House saying “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency.”

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The announcement threatens upheaval across supply chains from energy to automobiles and food.

Trump has repeatedly expressed his love for tariffs, and has signaled that Saturday’s action could be the first volley in further trade conflicts to come.

This week, the US president pledged to impose duties on the European Union.

He has also promised tariffs on semiconductors, steel, aluminum, as well as oil and gas – without specifying which countries would be targeted.

Trump returned to his Mar-a-Lago estate in Florida for the weekend with no public events on his official schedule Saturday. He headed to the golf course Saturday morning.

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Canadian Prime Minister Justin Trudeau is expected to hold a press conference around 6:00 pm (2300 GMT), two Canadian government sources told AFP.

Growth concerns

Imposing sweeping tariffs on three key US trading partners carries risks for Trump, who swept to victory in November’s election partly due to public dissatisfaction over the economy.

Higher import costs would likely “dampen consumer spending and business investment,” said EY chief economist Gregory Daco.

He expects inflation would rise by 0.7 percentage points in the first quarter this year with the tariffs, before gradually easing.

“Rising trade policy uncertainty will heighten financial market volatility and strain the private sector, despite the administration’s pro-business rhetoric,” he said.

Trump’s supporters have downplayed fears that tariffs would fuel inflation, with some suggesting his planned tax cuts and deregulation measures could boost growth instead.

Democratic lawmakers criticized Trump’s plans, with Senate Minority Leader Chuck Schumer saying Friday: “I am concerned these new tariffs will further drive up costs for American consumers.”

Canada and Mexico are major suppliers of US agricultural products, with imports totaling tens of billions of dollars from each country per year.

Tariffs would also hit the auto industry hard, with about 70 percent of light vehicles built in Canada and Mexico destined for the United States, according to S&P Global Mobility.

The research group added that automakers and suppliers also produce components throughout the region, meaning tariffs will likely increase costs for US-made vehicles.

Ready to respond

Trudeau said Friday that Ottawa is ready with “a purposeful, forceful” response.

Doug Ford, premier of Canada’s economic engine Ontario, warned Saturday that “the impact of these tariffs will be felt almost immediately,” predicting potential job losses and a slowdown in business.

Canada should “hit back hard and hit back strong,” he said at a local election campaign stop.

Mexican President Claudia Sheinbaum previously said her government would await any announcement “with a cool head” and had plans for whatever Washington decides.

Sheinbaum has met Mexican business representatives, with her economy minister Marcelo Ebrard saying on social media Saturday that the private sector was closing ranks around her in the face of potential commercial “arbitrariness.”

White House Press Secretary Karoline Leavitt, however, on Friday dismissed concerns of a trade war.

Hiking import taxes on crude oil from countries like Canada and Mexico could bring “huge implications for US energy prices, especially in the US Midwest,” noted David Goldwyn and Joseph Webster of the Atlantic Council.

Nearly 60 percent of US crude oil imports are from Canada, according to a Congressional Research Service report.