By Ana Swanson, Ian Austen and Simon Romero
Sweeping tariffs on imports from Canada, Mexico and China went into effect just after midnight Tuesday, raising U.S. tariffs to levels not seen in decades and rattling foreign governments and businesses that depend on international trade.
As of 12:01 a.m. Tuesday, the Trump administration added a 25% tariff on all imports from Canada and Mexico. The administration also added another 10% tariff on all imports from China. That comes on top of a 10% tariff on Chinese goods put into effect just one month ago and a variety of older levies, including those that remain from the China trade war in President Donald Trump’s first term.
The tariffs will make good on Trump’s campaign promise to rework America’s trade relations, and they are likely to encourage some manufacturers who want to sell to American customers to set up factories in the United States, instead of other countries.
But by altering the terms of trade between the United States and its largest economic partners, the tariffs will also probably rattle supply chains, strain some of the country’s most important diplomatic relationships and add significant costs for American consumers and manufacturers.
Canada, Mexico and China are the three largest trading partners of the United States, accounting for more than 40% of both U.S. imports and exports last year. The three countries supply the bulk of crude oil, beer, copper wire, toilet paper, hot-rolled iron, cucumbers and chocolate imported by the United States, as well as a dizzying array of other products.
The tariffs came as somewhat of a surprise, given that Mexico and Canada have gone to great lengths in recent weeks to convince the president that they were stepping up enforcement of their borders. The president initially threatened in November to impose the tariffs, saying that the three countries were not doing enough to halt the flow of drugs and migrants into the United States.
On Monday, however, Trump appeared to change his terms, saying that Canada and Mexico needed to relocate auto factories and other manufacturing to the United States.
“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,” he said.
Prime Minister Justin Trudeau of Canada said Monday evening that his country would respond with its own tariffs of 25% on $155 billion of American goods. Tariffs on $30 billion would go into effect Tuesday, and the remainder in 21 days, he said.
Trudeau said that less than 1% of the fentanyl intercepted at the U.S. border came from Canada, but that the country had still worked to stop its flow, pushing fentanyl seizures to near zero by January.
“Canada will not let this unjustified decision go unanswered,” Trudeau said.
The Mexican government had also gone to great lengths to step up its border enforcement, including cracking down on the cartels producing fentanyl and handing over dozens of top cartel operatives to the United States. Mexico also pledged to deploy 10,000 National Guard troops to help deter migration, building on earlier efforts to disassemble migrant caravans well before they reach the border with the United States.
Activity at the border had already calmed by the time Trump took office in January, but in recent weeks border crossings have declined to the lowest in recent history. At one point in February, U.S. personnel on the Mexican border encountered only 200 migrants in a single day, levels that were once unthinkable.
In Canada, which is a minuscule source of fentanyl compared with Mexico, the threat of tariffs sparked frustration and outrage. It also led to a surge of patriotism and anti-American sentiment, which was intensified by Trump’s repeated calls for the annexation of Canada.
Shortly after Trump, as president-elect, first made the tariff threat in November, Trudeau flew to Florida to meet him at Mar-a-Lago, the president’s estate and private club. Canada began assembling a list of retaliatory tariffs and put together a plan to increase security at its border. That included appointing a “fentanyl czar,” leasing Black Hawk helicopters for Royal Canadian Mounted Police patrols and buying a fleet of drones.
Days before the tariffs were imposed, some business leaders who are members of a Canada-U.S. relations group that Trudeau set up after the tariff threat were already pessimistic that the lobbying, the alliance building and the border strengthening would bring another last-minute reprieve.
Steve MacKinnon, Canada’s employment minister, said Monday that the government would move to introduce extra wage supports for workers who are left jobless because of the tariffs.
Economists have estimated that the tariffs will lower economic growth throughout North America, but that they will hit Canada and Mexico the hardest, given that those countries send roughly 80% of their exports to the United States.
In contrast, China sends only about 15% of its exports to the United States, so it is much less exposed to the tariffs. While Canada and Mexico worked hard to appease Trump, China did not make similar overtures. The Chinese government did not want to be seen as pleading and was wary of offering concessions before it understood the parameters of the negotiation, people familiar with their thinking said.
In a statement, a spokesperson for the Chinese Ministry of Commerce said China was “strongly dissatisfied” and would take countermeasures to “safeguard its own rights and interests.” The spokesperson accused the United States of disregarding facts and international trade rules, and described the episode as “bullying.”
The tariffs on Canada, Mexico and China come in addition to a raft of other tariff proposals Trump has made this year. The administration is set to introduce tariffs on foreign steel and aluminum on March 12, and has suggested that it will introduce a variety of others, including on foreign cars, in April. Trump has also opened trade investigations that could result in tariffs on copper and timber.
Comments