The Drum Of Trump's Trade War Import Tariffs That Canada, Mexico And China Immediately Responded To

JAKARTA - The new 25% tariff imposed by the President of the United States (US) Donald Trump on imports from Mexico and Canada took effect on Tuesday, along with new duties on Chinese goods.

The new rate sparked a trade war that could hinder economic growth and raise prices for Americans who have been ill due to high inflation for years.

The move, which is believed to increase annual trade by $2.2 trillion, comes after Trump said three major US trading partners had failed to do enough to stem its fentanyl and precursor chemical flows to the US.

In his speech before Congress, Trump said further tariffs would be imposed on April 2, including a 'reciprocal rate' and non-tariff measure aimed at balancing trade imbalances over the years.

Other countries have been applying tariffs to us for decades, and now it's our turn, Trump said, citing the high tariffs imposed on US goods by India, South Korea, the European Union, China, and other countries.

China's Ministry of Foreign Affairs retaliates in a challenging tone: "If war is what the US wants, be it tariff wars, trade wars, or other types of war, we are ready to fight until the end."

Trade Minister Howard Lutnick said US officials had spoken to Mexico and Canada "all day round" and may still make partial resolutions with the two neighboring countries, adding that they needed to do more in terms of fentanyl.

"I think there will be some movement. It won't lose the rate, but it will probably change the rate a little bit," he said.

Lutnick said Trump was considering providing some relief to companies complying with the rules under the US-Mexico-Canada Agreement on renegotiated trade by 2026.

Trump praised his tariff agenda for his efforts to curb the frentanyl overdose crisis, and Ukraine's mineral deal in a televised nationally broadcast on television at a joint Congressional session on Tuesday night.

Meanwhile, Canadian Prime Minister Justin Trudeau described the tariff as "a very stupid thing to do" and retaliated at a rate of 25% against US imports worth C$30 billion ($20.7 billion), including orange juice, peanut butter, wine, alcoholic beverages, beer, coffee, household appliances, and motorcycles.

Meanwhile, Mexican President Claudia Sheinbaum vowed to retaliate but without details.

Sheinbaum will announce Mexico's response on Sunday.

Lutnick's remarks regarding negotiations raised Canadian dollars and Mexican pesos from previous major losses on Tuesday, but Trump's tariff sparked a global stock sell-off.

China immediately responded by announcing an additional 10%-15% tariff on certain imports from the US from March 10 and a series of new export restrictions for designated US entities.

Recently, China filed a complaint regarding US tariffs with the World Trade Organization.

Trudeau said Canada would impose another tariff on US goods worth C$125 billion if Trump's rates were still in effect within 21 days, likely to include motorized vehicles, steel, aircraft, beef and pork. Canada will also oppose US tariffs under WTO regulations and the US-Mexico-Canada free trade agreement.

"They chose to launch a trade war that, first and foremost, would harm American families," Trudeau said of the Trump administration.

Trudeau said he believed Trump would instead want to weaken Canada's economy to the point where Ottawa would consider annexation by the US.

Ontario Prime Minister Doug Ford has terminated a C$100 million contract with Elon Musk's Starlink network, barring US companies from contracting with the provincial government and saying that if Trump rates remain in effect, he will charge an additional 25% for Ontario's electricity exports to the US.

"Please explain to the Governor of Trudeau, Canada, that when he imposes a retaliatory fee against the US, our Balik Timbal Tariff will soon increase by the same amount!" Trump wrote in a post on his personal social media platform.

PRICE INCREASE

The rate has sparked several price increases in the US, and goes against Trump's pledge in elections to lower the cost of living for Americans.

Target CEO Brian Cornell told the retail giant CNBC it will raise prices "in the next few days" on some seasonal food products such as avocado from Mexico.

Best Buy electronics retailers also warn of higher price potentials.

The company's CEO, Corie Barry, told analysts China remains the main source of products sold by the company and Mexico in second place.

The 20% tariff on Chinese imports will apply to several major Chinese electronic categories that have not been hit by previous import duties, including smartphones, laptops, video game consoles, smart watches and speakers, as well as Bluetooth devices.

"We estimate tariffs can lead to an increase in the price of goods by almost $1,000 per household every year," said Nationwide Mutual economist Kathy Bostjancic. "The dollar strengthening helps mitigate some of the impacts of inflation, which should be bigger," he continued.