6 days Ago
WASHINGTON (AP) — President Donald Trump launched a trade war Tuesday against America’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin as the US faced the threat of rekindled inflation and paralyzing uncertainty for business. Just after midnight, Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%.
Beijing retaliated with tariffs of up to 15% on a wide array of US farm exports. It also expanded the number of US companies subject to export controls and other restrictions by about two dozen. Canadian Prime Minister Justin Trudeau said his country would plaster tariffs on more than $100 billion of American goods over the course of 21 days.
“Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said.
Later in the day, Commerce Secretary Howard Lutnick said the US would likely meet Canada and Mexico “in the middle,” with an announcement coming as soon as today. Lutnick told Fox Business News that the tariffs would not be paused, but that Trump would reach a compromise. “I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick said.
Mexican President Claudia Sheinbaum said Mexico will respond to the new taxes with its own retaliatory tariffs. Sheinbaum said she will announce the products Mexico will target on Sunday. The delay might indicate that Mexico still hopes to de-escalate Trump’s trade war.
The president is abandoning the free trade policies the United States pursued for decades after World War II. He argues that open trade cost America millions of factory jobs and that tariffs are the path to national prosperity. He rejects the views of mainstream economists who contend that such protectionism is costly and inefficient.
Import taxes are “a very powerful weapon that politicians haven’t used because they were either dishonest, stupid or paid off in some other form,” Trump said Monday. “And now we’re using them.” Dartmouth College economist Douglas Irwin, author of a 2017 history of US tariff policy, has calculated that Tuesday’s hikes will lift America’s average tariff from 2.
4% to 10.5%, the highest level since the 1940s. “We’re in a new era for sure.
” As the trade disputes escalated, stocks racked up more losses Tuesday on Wall Street, wiping out all the gains since Election Day for the S&P 500. Markets in Europe also fell sharply. Trump has said tariffs are intended to address drug trafficking and illegal immigration.
But he’s also said the tariffs will come down only if the US trade deficit narrows. The American president has injected a disorienting volatility into the world economy, leaving it off balance as people wonder what he will do next..
