Trump’s New Tariffs on China, Canada, Mexico Take Effect
New tariffs imposed by the Trump administration on goods imported from China, Canada, and Mexico went into effect at midnight Tuesday, significantly raising taxes on a range of products entering the United States, Fox News reports.
The move has sparked widespread concern over the potential economic fallout and retaliatory measures from affected nations.
The tariffs, authorized under the International Emergency Economic Powers Act (IEEPA) and justified by President Trump as a measure to combat illegal fentanyl shipments and address unfair trade practices, have been met with swift condemnation and pledges of reciprocal action from US trading partners.
The China tariffs will see a new 10% levy applied to imported goods, adding to the existing 10% tariff imposed last month. Canada and Mexico, America’s top two bilateral trading partners, face even steeper increases with 25% tariffs now levied on all imports, with a carve-out for a lower 10% tariff on Canadian oil imports.
President Trump, when questioned on Monday about the possibility of further negotiations to avert the tariffs, stated definitively:
“No room left for Mexico or for Canada. No, the tariffs, you know, they’re all set. They go into effect tomorrow.”
The tariffs on Canada and Mexico were initially delayed by a month following announcements of enhanced border security measures. However, with the tariffs now in effect, anxieties over a potential trade war are escalating.
Retaliation Looms Large
US trading partners have already signaled their intent to retaliate, promising tariffs on American exports and exploring non-tariff trade barriers aimed at US firms.
Canada has announced a sweeping 25% tariff on a diverse array of American exports, including machinery, auto parts, apparel, alcohol, tobacco, sports equipment, plastic products, construction materials, lumber, agricultural products, appliances, furniture, and chemicals. Further tariffs are planned on other US-made goods, potentially encompassing cars, trucks, electric vehicles, steel, aluminum, fruits, vegetables, and dairy products.
Mexico’s government, anticipating the potential tariffs since February, has indicated it will implement retaliatory measures. While specific details are still emerging, reports suggest tariffs ranging from 5% to 20% could be applied to US pork, cheese, produce, and manufactured steel and aluminum.
China previously retaliated against initial tariffs with 15% levies on U.S. energy exports, including coal, natural gas, and petroleum, as well as 10% tariffs on manufactured goods. New tariffs are expected to be retaliated against with the Chinese government reportedly eyeing tariffs on US agricultural exports and food products.
Economic Impact Under Scrutiny
The impact of these tariffs on the US economy is a subject of intense debate. A recent analysis by the Tax Foundation suggests that while tariffs on Chinese goods would reduce long-run GDP by 0.1%, the tariffs on Canadian and Mexican goods would have a more substantial impact, reducing GDP by 0.3%. These figures do not account for the potentially devastating effects of retaliatory tariffs.
In 2024, the US imported $292 billion of non-energy products and $120 billion in energy products from Canada, $504 billion from Mexico, and $430 billion from China.
