trade war, tarrif war,
Image Source : AP Mexico’s President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau

President Donald Trump on Saturday triggered a tariff war between the US, Canada and Mexico. Trump signed an order to impose stiff tariffs on imports from Mexico, Canada and China, drawing swift retaliation from the country’s North American neighbours in an emerging trade war.

Soon after Trump’s move, outgoing Canadian Prime Minister Justin Trudeau hit back at the US by declaring 25% tariffs on USD 155 billion in US imports in retaliation.

Mexico also retaliates US tariff

Mexico’s President Claudia Sheinbaum also reacted to Trump’s announcement by saying her country will retaliate against tariffs imposed by Trump. Mexico’s president immediately ordered retaliatory tariffs and Canada’s prime minister said the country would put matching 25% tariffs on up to $155 billion in US imports. China did not immediately respond to Trump’s action.

“I am announcing that Canada will be responding to the US trade action with 25% tariffs against American goods worth USD 155 billion, this will include immediate tariffs on American goods worth USD 30 billion as of Tuesday followed by further tariffs on goods worth USD125 billion in the 21 days to allow the Canadian companies to find alternatives”, Trudeau said.

Trump triggers tariff war

Earlier, President Donald Trump on Saturday waged a trade war after signing an order to impose stiff tariffs on imports from Mexico, Canada and China, drawing swift retaliation from the country’s North American neighbours. The Republican president posted on social media that the tariffs were necessary “to protect Americans,” pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the US. The action fulfilled one of Trump’s commitments to voters but threw the global economy and Trump’s own political mandate to lower prices into turmoil.

The tariffs, if sustained, could cause inflation to significantly worsen, possibly eroding voters’ trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.

Trump declared an economic emergency in order to place duties of 10% on all imports from China and 25% on imports from Mexico and Canada. But energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10% rate.

The action provoked an economic standoff with America’s two largest trading partners in Mexico and Canada, upending a decades-old trade relationship with the possibility of harsh reprisals by those two nations.

Trump’s order includes a mechanism to escalate the rates charged by the US against retaliation by other countries, raising the spectre of an even more severe economic disruption.

(AP inputes)