IRIA News

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U.S. President Donald Trump’s 25% tariffs on imports from Canada and Mexico, and 20% tariff on Chinese goods, officially took effect on March 4, 2025, marking a significant escalation in trade tensions between the United States and its major trading partners. The move has raised fears of trade wars that could lead to higher inflation.

China and Canada swiftly retaliated with tariffs on U.S. goods in retaliation, escalating the risk of a damaging trade war, while Mexico announced it would reveal its countermeasures on Sunday.

The move, which is part of the administration’s broader trade policy agenda, is expected to raise the cost of living for U.S. consumers already grappling with inflation, while escalating concerns about the broader impact on the global economy. The action has already triggered retaliatory actions from both Canada and China.

Last year, the United States engaged in nearly $2.2 trillion in trade with the countries targeted by the president’s tariffs, including $840 billion in trade with Mexico, $762 billion with Canada, and $582 billion with China.

Why is Trump imposing the tariffs?

Trump has imposed the tariffs to incentivize manufacturers to bring production back to the U.S. He argued that companies would avoid tariffs if they built their plants domestically. Additionally, he framed the measures as a response to illegal migration and fentanyl trafficking, claiming that Chinese fentanyl was being funneled through Mexico and Canada with the support of the Chinese government.

The Trump administration said the tariffs were necessary to stem the flow of fentanyl into the United States. “While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation,” according to a statement released by the White House.

Canada announced retaliatory tariffs against the US

Canada’s response to the U.S. tariffs was swift. Prime Minister Justin Trudeau condemned the actions, labeling them an unprovoked attack on Canada’s economy.

“The United States launched a trade war against Canada, its closest partner and ally, their closest friend. At the same time they’re talking about working positively with Russia, appeasing Vladimir Putin: a lying, murderous dictator. Make that make sense,” the prime minister said.

In a televised address, he emphasized that the tariffs would hurt both American and Canadian consumers and businesses. “We don’t want this,” Trudeau said, directly addressing U.S. citizens. “But your government has chosen to do this to you.”

The moment U.S. tariffs came into effect this morning, so did the Canadian response.

Canada will be implementing 25% tariffs against $155 billion of American products.

Starting with $30 billion worth of goods immediately, and the remaining $125 billion in 21 days’ time.

— Justin Trudeau (@JustinTrudeau) March 4, 2025

Trudeau’s government announced retaliatory tariffs on $155 billion worth of U.S. goods, with 30 billion Canadian dollars worth of goods being immediately impacted. The remaining 125 billion Canadian dollars’ worth will face tariffs in 21 days.

The Canadian prime minister made it clear that the country would not back down. “Canadians are reasonable, and we are polite. But we will not back down from a fight. Not when our country — and the wellbeing of everyone in it — is at stake,” he declared.

Trudeau also rejected President Trump’s justification for the tariffs, specifically the claim that Canada had failed to tackle the flow of fentanyl into the U.S. “Our border is already safe and secure. Less than 1% of fentanyl flows from Canada into the United States,” he asserted, categorically dismissing Trump’s allegations.

President Donald Trump responded to Canadian Prime Minister Justin Trudeau, threatening to “immediately” increase reciprocal tariffs on the neighboring country. “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount,” Trump wrote in a Truth Social post.

Ontario Premier Doug Ford announced the province’s response to U.S. tariffs, including banning American companies from local procurement deals and canceling its contract with Elon Musk’s company SpaceX for high-speed internet.

“We’re ripping up Ontario’s contract with Starlink. It’s done. It’s gone,” Ford declared. He also threatened a 25% surcharge on electricity exports to the U.S. and warned, “We will not hesitate to shut off their power as well,” adding that “We need to make sure America feels the pain.”

China responds with more tariffs on US products

Soon after Trump’s latest tariffs took effect, China — the largest market for American farm products — said that it was imposing its own tariffs on food imported from the United States. The Chinese government announced tariffs of up to 15% on U.S. goods ranging from soybeans to dairy products effective from March 10.

In addition, China’s Ministry of Commerce said 15 U.S. companies, including drone makers Skydio, Shield AI and AeroVironment, would no longer be allowed to buy products from China except with special permission.

Lou Qinjian, a spokesman for China’s National People’s Congress, blamed the United States for violating the World Trade Organization’s free trade rules. “By imposing unilateral tariffs, the U.S. has violated W.T.O. rules and disrupted the security and stability of the global industrial and supply chains,” he said.

Chinese officials warned of continued trade retaliation, with Ministry of Foreign Affairs spokesperson Lin Jian stating, “If Washington insists on starting a tariff war, a trade war or any kind of war, China will fight to the last.” The added tariffs exacerbate the strain between the world’s two largest economies and signal that China is prepared to retaliate strongly against U.S. trade policies.

Mexico preparing for retaliatory measures

Mexico, the third key player in this trade dispute, also condemned the U.S. tariffs, with President Claudia Sheinbaum announcing that Mexico would impose retaliatory measures. However, Mexico has opted for a slightly more measured response, stating that the full details of its countermeasures will be revealed on Sunday.

Sheinbaum’s government voiced its disapproval of the U.S. tariffs, noting that 80 percent of Mexico’s exports go to the United States. “There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” Sheinbaum added. “It’s inconceivable that they don’t think about the damage this is going to cause to United States citizens and businesses,” Sheinbaum said. “No one wins with this decision.”

Sheinbaum expressed hope that dialogue with the U.S. might de-escalate tensions, with a planned call between her and President Trump to take place later this week.

Impacts on Consumers and Global Markets

The implementation of these tariffs is expected to have significant ripple effects on both domestic economies and global markets. U.S. consumers could face higher prices on a variety of products, from electronics to agricultural goods, as a result of the increased tariffs on imports from Mexico, Canada, and China. Economists warn that these higher costs could stoke inflation, while also placing additional strain on corporate profit margins.

The immediate impact has already been felt in the stock markets, with global equities dipping amid growing concerns over the potential for an extended trade war. In the longer term, the risks of inflation and disrupted supply chains could undermine the economic stability that has fueled much of the global recovery from the pandemic.