Trump's tariffs spark global trade war as China and Canada retaliate

Roxanne Cooper
04 March
Donald Trump and China's President Xi Jinping shake hands ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019.

President Donald Trump's sweeping tariffs plan went into effect at midnight US time, despite warnings of a potential escalating trade war, according to a report in the Guardian. The US imposed 25% tariffs on goods from Canada and Mexico, its two biggest trading partners, and doubled the levy on Chinese imports to 20%. These duties will affect over $918 billion worth of US imports from Canada and Mexico.

In response, China announced retaliatory measures, including additional 15% tariffs on US agricultural imports such as chicken, wheat, corn, and cotton, and 10% tariffs on sorghum, soybeans, pork, beef, and various other products. These tariffs are set to take effect next week.

Canadian Prime Minister Justin Trudeau announced immediate 25% tariffs on C$30 billion worth of US imports, targeting items like beer, wine, bourbon, home appliances, and Florida orange juice. Canada also threatened to impose tariffs on another C$125 billion of US goods if Trump's tariffs remain in place after 21 days. Trudeau emphasized that these tariffs would disrupt a successful trading relationship and violate the US-Mexico-Canada free trade agreement signed during Trump's first term.

Mexico's President Claudia Sheinbaum was expected to announce her country's response on Tuesday morning.

The tariffs have already impacted global markets. Asian markets experienced declines, with Japan's Nikkei falling 1.6%, Taiwan's TWII index down 0.5%, and Hong Kong's Hang Seng dropping 0.5%. The Canadian dollar and Mexican peso fell to their lowest levels in a month. European markets also felt the impact, with the FTSE 100 dropping 0.65%, France's CAC 40 falling 0.9%, and Spain's Ibex down 0.8%.

Trump and his allies argue that higher tariffs on US imports will help secure political and economic concessions from global allies and rivals. However, businesses both in the US and worldwide have warned of widespread disruption if this strategy continues.

Trump has threatened to introduce "reciprocal" tariffs on countries that have their own duties on US-made goods, potentially as soon as next month.

China's finance ministry criticized the US move, stating that it damages the multilateral trading system, increases burdens on US companies and consumers, and undermines economic and trade cooperation between China and the US. The Chinese government opposes the tariffs and vows to protect its legitimate interests.

Trump justifies the tariffs on China by citing the government's failure to stop illicit fentanyl from entering the US, which Beijing dismisses as a pretext.

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