7 hours Ago
US President Donald Trump on Saturday (Feb 1) ordered 25 per cent tariffs on Canadian and Mexican imports and 10 per cent on goods from China starting on Tuesday and declared that they would remain in place until a national emergency over the drug fentanyl and illegal immigration to the US ends. Energy products from Canada will have only a 10 per cent duty, but Mexican energy imports will be charged the full 25 per cent, officials told reporters. A White House fact sheet on the duties said they would remain in place "until the crisis alleviated", but it did not provide details on what actions the three countries would need to take to win a reprieve.
The moves follow through on a repeated threat Trump has made since shortly after winning last year's presidential election, and they likely will trigger retaliation and risk igniting a trade war that could cause broad economic disruption for all countries involved. Tariff collections are set to begin at 12.01am EST (0501 GMT) on Tuesday, according to Trump's written order.
But imports that were loaded onto a vessel or onto their final mode of transit before entering the US prior to 12.01am Saturday would be exempt from the duties. Trump has declared the national emergency under the International Emergency Economic Powers Act and the National Emergencies Act to back the tariffs, which allows the president sweeping powers to address crises.
The White House officials said there would be no exclusions from the tariffs. Moreover, in the case of Canada specifically, they said the "de minimis" US tariff exemption for small shipments under US$800 would be cancelled. Trump, who golfed at his Mar-a-Lago estate in Florida on Saturday before signing the order, was not scheduled to speak to reporters about the tariffs.
Trump set the Feb 1 deadline to press for strong action to halt the flow of the opiate fentanyl and precursor chemicals into the US from China via Mexico and Canada, as well as to stop illegal immigrants crossing US borders. Less than two weeks into his second term, Trump is upending the norms of how the United States is governed and interacts with its neighbours and wider world. On Friday, he pledged to proceed with the levies despite acknowledging they could cause disruption and hardship for American households.
A model gauging the economic impact of Trump's tariff plan from EY Chief Economist Greg Daco suggests it would reduce US growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in "stagflation" at home. "We have stressed that steep tariff increases against US trading partners could create a stagflationary shock - a negative economic hit combined with an inflationary impulse - while also triggering financial market volatility," Daco wrote on Saturday.
That volatility was evident on Friday, when the Mexican peso and Canadian dollar both slumped after Trump vowed to fulfil his threats. US stock prices also fell and Treasury bond yields rose..
