• Donald Trump’s trade war with Canada, Mexico, and China escalated as US tariffs took effect. 
• Canadian Prime Minister Justin Trudeau condemned the tariffs, warning of economic collapse and potential annexation. 
• Global markets fell sharply, with analysts warning of higher consumer prices and disrupted supply chains. 

Donald Trump’s trade war against America’s largest trading partners escalated as huge US tariffs on Canada, Mexico and China kicked in, sparking angry retaliation from all three. 

Canadian Prime Minister Justin Trudeau slammed the tariffs as “a very dumb thing to do”, and said Trump was seeking to collapse Canada’s economy to make it easier for the United States to annex his country. 

Trudeau said the US President, who has spoken often of making Canada the 51st American state, “wants to see a collapse of the Canadian economy because that would make it easier to annex us”. 

“The United States launched a trade war against Canada,” Trudeau said. 

“Canadians are reasonable. We are polite. We will not back down from a fight.” 

Trudeau also addressed Trump directly, saying that while he thinks Trump is a “smart guy,” the tariffs are a “very dumb thing to do.” 

Mexican President Claudia Sheinbaum said she would be laying out her country’s response to the measures on Sunday. 

Global markets fell sharply in response to the escalating trade war, with the S&P 500 – a major Wall Street index – extending recent losses to erase all of its gains since Trump’s US election victory in November. 

Trump had announced – and then paused – blanket 25% tariffs on imports from major trading partners Canada and Mexico in February, accusing them of failing to stop illegal immigration and drug trafficking. 

He pushed ahead with them Tuesday, citing a lack of progress on both fronts. 

The sweeping duties will hit over $918 billion in US imports from both countries, affecting everything from avocados to the lumber crucial for building US homes, and hampering supply chains for key sectors like automobiles. 

Trump also inked an order on Monday to increase a previously imposed 10% tariff on China to 20% – piling atop existing levies on various Chinese goods. 

Beijing condemned the “unilateral imposition of tariffs by the US”, filing a complaint with the World Trade Organisation and threatening to impose 10 and 15% levies on a range of agricultural imports from the United States. 

Pushing up prices 

Analysts have warned that the higher import costs could push up prices for consumers, complicating efforts to bring down inflation. 

That includes at grocery stores – Mexico supplied 63% of US vegetable imports and nearly half of US fruit and nut imports in 2023, according to the US Department of Agriculture. 

Housing costs could also be hit. More than 70% of imports of two key materials homebuilders need – softwood lumber and gypsum – come from Canada and Mexico, said the National Association of Home Builders. 

Truck drivers at the Otay Mesa border crossing in Mexico told AFP they were already feeling the impact as they waited to cross into the United States early Tuesday. 

Work was drying up because many companies in the Mexican border city of Tijuana export Chinese goods, said driver Angel Cervantes. 

Fight to ‘the bitter end’ 

Ottawa’s retaliatory 25% tariffs on $30 billion of goods went into effect early on Tuesday, and Trudeau said that they would expand to “the remaining $125 billion of American products in 21 days time”. 

He said that Washington had launched a “trade war.” 

China said its tariffs against the United States will come into effect next week and will impact tens of billions of dollars in imports, from soybeans to chickens. 

Beijing announced that all imports of US lumber have been suspended, and that soybean shipments from three American exporters have been halted, as country’s foreign ministry vowed to fight the US trade war to the “bitter end”. 

European Union trade spokesman Olof Gill warned the tariffs on Canada and Mexico threatened transatlantic “economic stability” and risked disrupting global trade, urging Washington to reverse course. 

The Tax Foundation estimates that before accounting for foreign retaliation, tariffs on Canada, Mexico and China this time would each cut US economic output by 0.1%. 

“We could easily reach the highest effective tariff rate since 1936 by the beginning of 2026,” KPMG chief economist Diane Swonk warned ahead of the tariffs going into effect. 

Both consumers and manufacturers stand to bear the costs of additional tariffs, which could diminish demand and trigger layoffs as businesses try to keep costs under control, she told AFP. 

- Agence France-Presse