Donald Trump hit Canada, Mexico and China with steep tariffs on Saturday in a move that threatens to launch a new era of trade wars between the US and three of its largest trading partners.
Trump issued an executive order applying additional tariffs of 25 per cent to all imports from Canada and Mexico, with the exception of Canadian oil and energy products, which will face a 10 per cent levy. Canada is by far the biggest foreign oil supplier to the US, accounting for about 60 per cent of its crude imports.
A White House official said lower tariffs for Canadian energy aimed to minimise the “disruptive effects” on US petrol and home heating costs, but confirmed there would be no further exclusions.
Imports from China will face a 10 per cent tariff, over and above the existing US tariffs.
The White House said the tariffs would apply from Tuesday.
“This is a beautiful, beautiful example of promises made, promises kept by President Trump,” a White House official said.
The official said each order contained “a retaliation clause . . . so that if any country chooses to retaliate in any way, the signal will be to take further action with respect to likely increased tariffs.”
There was no immediate response from America’s trading partners, although Canadian Prime Minister Justin Trudeau was expected to announce retaliatory tariffs later tonight.
The president used the International Emergency Economic Powers Act, an executive authority that allows him to respond to emergencies through economic means, to apply the levies without needing congressional approval.
Trump’s abrupt opening move will dash the hopes of countries that expected a slower and more cautious approach to trade policy after the Trump administration ordered a raft of reviews into US commercial relationships on inauguration day.
It also signals the president’s willingness to use tariffs to apply pressure to allies on issues ranging from immigration to drug trafficking. Trump has justified the tariffs by complaining about what he says is lax security at the borders with Mexico and Canada, and arguing that both — along with China — have failed to do enough to stem the flow of deadly opioids into the US.
On Saturday, a White House official said the tariffs would be lifted as soon as “Americans stop dying from Made in China, distributed by Mexico and Canada fentanyl”.
The official added: “This is not just about fentanyl . . . this is really a border security issue.”
In a question-and-answer session with reporters on Friday afternoon, Trump also pointed to the America’s trade deficit with Canada, Mexico and China, describing his tariffs as purely economic and denying that they were a negotiating tool.
Trump also acknowledged that sweeping tariffs against US trading partners may cause some “disruption”, but added: “The tariffs are going to make us very rich, and very strong.”
On Friday, Trump said he planned to levy tariffs on EU imports too, but Saturday’s announcement did not include any measures relating to the EU.
Trump held back from imposing the 60 per cent tariff on Chinese imports from China that he had threatened during the presidential campaign. The 10 per cent levy was designed to punish Beijing over the flow of ingredients to make fentanyl, a deadly opiate that has been the leading cause of death for Americans aged 18 to 45 over the past three years.
Beijing cracked down on the export of fentanyl several years ago, but groups in China switched to exporting precursor chemicals to cartels in Mexico to produce the final product.
Dimitry Anastakis, a professor of business at the University of Toronto, said the US tariffs could be a shock to the system as painful as the Covid pandemic.
“It is unnecessary and quite stupid,” he said. “This is taking a sledge hammer to a non-existent problem with the North American economy that was working pretty well.”
Anastakis said there will be immediate pain in the auto trade, job losses and a likely recession in Canada.
Additional reporting by Ilya Gridneff in Toronto and Demetri Sevastopulo in Washington
