Canada and Mexico hit back after Trump signs order for punishing tariffs
Justin
Trudeau, Canada’s prime minister, announces tit-for-tat 25% tariffs and
warns of impeded access to ‘vital goods critical to US security’
The leaders of Canada and Mexico have hit back after Donald Trump
signed an order authorizing drastic tariffs of up to 25% on their
exports to the US, while China said it would complain to the World Trade
Organization after it was also targeted by the president.
Canada’s
prime minister, Justin Trudeau, on Saturday night made a televised
address announcing concrete measures including a tit-for-tat 25% tariff
phased in across C$155bn ($107bn) worth of American products. Trudeau
said Trump had put at risk US consumers’ and industries’ access to
much-needed Canadian critical minerals and resources including oil,
energy and timber. The prime minister promised to work with Canada’s
provinces to review dealings with the United States.
Addressing
Americans, Trudeau said: “Tariffs against Canada will put your jobs at
risk, potentially shutting down American auto assembly plants and other
manufacturing facilities. They will raise costs for you including food
at the grocery store and gas at the pump. They will impede your access
to an affordable supply of vital goods crucial for US security such as
nickel, potash, uranium, steel and aluminum.”
Trudeau
added: “They will violate the free trade agreement that the president
and I along with our Mexican partner negotiated and signed a few years
ago” – referring to the United States Mexico
Canada agreement (USMCA) that was drawn up largely at Trump’s behest
after he tore up the previous North America free trade agreement (Nafta)
during his first term as US president.
To
begin with, from Tuesday Canada will levy 25% tariffs on C$30bn worth of
US goods coming into Canada. The tariffs will then be added to C$125bn
of US imports in three weeks.
Trudeau said
Canada’s industries such as oil could “have leverage over the United
States” but no single sector should bear a greater burden than others of
the US tariffs and Canada’s response to them. Doug Ford, the premier of
Canada’s industrial and trade powerhouse Ontario province, earlier
said: “Canada now has no choice but to hit back and hit back hard.
Canada has so much of what America needs: high-grade nickel and other
critical minerals, energy and electricity, uranium, potash, aluminum. We
need to maximize our points of leverage and use them to maximum
effect.”
Trudeau called on Canadians to “buy
less American products … choose Canadian products and services rather
than American ones. Provinces are announcing measures such as removing
American spirits, liquor and alcohol from their stores”. Canada wanted
to “encourage Americans to back down on these tariffs and we will use
all the suite of tools at our disposal”, the prime minister said. He
said as examples that tariffs would affect American beer, wine and
bourbon, as well as fruits and fruit juices, including orange juice from
Trump’s home state of Florida. Canada would also target goods including
clothing, sports equipment and household appliances.
“We didn’t ask for this but we will not back down,” Trudeau said.
Trump
has broadly accused Canada and Mexico of letting illicit drugs and
illegal immigrants across their borders while profiting unfairly from
trade with the US. He signed three executive orders on Saturday imposing
tariffs of 25% on all goods from Mexico and Canada. Trump imposed a 10%
tariff on Canadian oil exports, as well as a 10% tariff on imports from
China.
Claudia
Sheinbaum, the president of Mexico, said she had ordered her economy
minister to implement tariff and non-tariff measures to defend Mexico’s
interests. Sheinbaum said her country should move forward with a “cool
head” and a planned retaliatory response. During a speech
at an unrelated event, minutes after news of Trump’s tariffs came
through, Sheinbaum appeared to rally her base. “When we negotiate with
other nations, when we talk with other nations, we always do so with our
heads held high, never with our heads down,” she said.
Canada’s Justin Trudeau and Mexico’s Claudia Sheinbaum. Photograph: AP
Trump’s
office said Chinese officials had failed to prevent drug precursors
from being shipped to Mexico and used by cartels. He also alleged that
Mexican drug traffickers had an “intolerable alliance with the
government of Mexico”.
In a statement released on social media,
Sheinbaum said: “We categorically reject the White House’s slander of
the government of Mexico having alliances with criminal organisations”.
She proposed establishing a workforce with Trump to combat the issues he
has with Mexico, saying: “Problems are not resolved by imposing
tariffs.”
China’s commerce ministry said on
Sunday that the imposition of tariffs by the US “seriously violates”
World Trade Organization (WTO) rules, urging the US to “engage in frank
dialogue and strengthen cooperation”.
Trump has
cited the devastation on US streets from the illegal drug fentanyl –
made with Chinese ingredients – but the foreign ministry in Beijing
said: “Fentanyl is America’s problem. The Chinese side has carried out
extensive anti-narcotics cooperation with the United States and achieved
remarkable results.”
Trump’s actions
set the stage for a damaging trade war between the US and three of its
top trade partners. Trump has also threatened to impose tariffs against
European Union nations.
Trump’s tariffs were
reportedly scheduled to go into effect on Tuesday, with a retaliation
clause to ratchet them up if Mexico, Canada or China tried to impose
their own in response.
Trump is imposing the
tariffs under the International Emergency Economic Powers Act. The
president cited the US opioid crisis when imposing his executive order,
laying much of the blame for drug trafficking on Canada.
In a post on Truth Social,
Trump said: “We need to protect Americans, and it is my duty as
president to ensure the safety of all. I made a promise on my campaign
to stop the flood of illegal aliens and drugs from pouring across our
borders, and Americans overwhelmingly voted in favor of it.”
Trucks enter the US from Canada at the Pacific Highway port of entry in Blaine, Washington, on Saturday. Photograph: David Ryder/Getty Images
In an information sheet on the tariffs, Trump also cited the “threat posed by illegal aliens” in his decision.
Trump’s
decision to levy a 10% tariff rate on Canadian energy products seems to
be some sort of recognition that tariffs can spur higher prices. The
White House has contended that tariffs will not fan the flames of
inflation.
The tariffs could have dire
repercussions for Mexico. “We have to remember that 40% of Mexico’s GDP
are exports,” said Gabriela Siller, director of economic analysis at
Grupo Financiero Base, adding that the Mexican economy could enter a
“severe recession” if the tariffs were maintained.
The
American Chamber of Commerce in Mexico, which represents US companies
in Mexico, said the tariffs would hit both economies and “fail to
address the real challenges of security, migration and drug
trafficking”, adding that “America First does not mean America Alone”.
Economists
have repeatedly sounded the alarm that higher tariffs will raise prices
on consumer goods for Americans, exacerbating an increased cost of living. Trump did recognize on Friday that his tariffs could prompt “temporary short-term disruption”.
He
said he hoped that Americans would understand why he was imposing them.
“Tariffs don’t cause inflation,” Trump claimed. “They cause success.”
The Washington senator Patty Murray posted on social media:
“Trump’s tariffs will cost families – literally. It’s not Mexico or
Canada or China who pays for these increases, it’s you. And you’ll feel
it on your wallet everywhere you shop.”
Colorado’s governor, Jared Polis, agreed:
“Trump’s tariffs will be a tax on Coloradans and American families, and
increase the cost of everything from food to gas. Trump’s tariffs make
us less competitive, hurt people and quite frankly make no sense.”
Jason
Smith, the ways and means committee chair, championed the tariffs.
“President Trump is delivering on his promise … The tariffs on imports
from Canada, Mexico and China send a powerful message that the United
States will no longer stand by as other nations fail to halt the flow of
illegal drugs and immigrants into our country. These measures will also
bring in billions in new revenue to the US government.”
The
Tax Foundation, a conservative group, has estimated that Trump placed
$80bn in tariffs on about $380bn worth of products in 2018 and 2019. The
foundation described this as “one of the largest tax increases in
decades”.
Joe Biden’s administration kept the
majority of those tariffs in place, and increased tariffs on an
additional $18bn of Chinese goods, including semiconductors and electric
vehicles.