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Canada and Mexico Respond to Trump's New Tariffs with Retaliatory Measures

 On Sunday, Canada imposed a 25% tariff on $155 billion worth of U.S. imports, following the U.S. decision to impose hefty tariffs on goods from Mexico, Canada, and China. Mexican President Claudia Sheinbaum also directed her economy minister to implement both tariff and non-tariff measures to safeguard Mexico's economic interests after U.S. President Donald Trump signed an order that imposes significant tariffs on imports from these countries.


The executive order signed by Trump includes provisions for escalating tariff rates if any of the affected countries retaliate, heightening the potential for an international trade standoff. This move has raised concerns about potential economic disruption, complicating Trump’s political agenda to combat inflation, though the president defended the decision, claiming it was necessary “to protect Americans.”

Trump explained on social media that the tariffs were part of a broader effort to address the "major threat" posed by illegal immigration and the illicit drug trade, particularly fentanyl. “Today, I have implemented a 25% tariff on imports from Mexico and Canada (10% on Canadian energy), and a 10% additional tariff on China,” Trump wrote. “This was done through the International Emergency Economic Powers Act (IEEPA) due to the major threat of illegal aliens and deadly drugs killing our citizens.”

The tariffs mark a drastic shift in U.S. trade relations with its two largest partners, Mexico and Canada, potentially destabilizing a decades-old trade framework. The policy could also exacerbate inflationary pressures in the U.S., undermining Trump’s previous promises to reduce the cost of essential goods such as groceries, gasoline, and housing.

The tariffs, set to take effect on Tuesday, would place duties of 10% on all Chinese imports, alongside a 25% tariff on goods from Mexico and Canada, with energy imports from Canada, including oil, natural gas, and electricity, taxed at 10%. Analysts have warned that these measures could significantly harm the U.S. economy, with estimates from Yale's Budget Lab suggesting that the average U.S. household could lose up to $1,170 in income due to the taxes. Further economic slowdown and worsening inflation are anticipated if Canada, Mexico, and China retaliate.

Importantly, the order signed by Trump provides no exceptions for key industries such as homebuilding, which relies on Canadian lumber, or agriculture and manufacturing, which could be impacted by the tariffs on various imports.

Trump’s administration has justified the tariffs as a means of combating the spread of fentanyl and pressuring Canada and Mexico to curb illegal immigration into the U.S. However, the order does not specify conditions under which the tariffs might be lifted, leaving it unclear what metrics would be used to gauge success. The administration’s focus on reducing fentanyl-related deaths is central to this strategy.

In response, Canadian Prime Minister Justin Trudeau expressed readiness to address the tariffs and reaffirmed Canada's stance on the issue. Trudeau indicated that he would discuss the matter with Mexican President Sheinbaum and with Canadian stakeholders.

Sheinbaum, in turn, criticized the U.S. government's accusations regarding Mexican involvement in criminal activities, categorically rejecting claims that Mexico is allied with drug cartels. “If the United States wanted to address fentanyl consumption, they could focus on combating drug trafficking in their major cities, which they have failed to do,” Sheinbaum stated, calling out the U.S. for not tackling money laundering associated with drug trade activities.

This unfolding situation has raised concerns about the potential for escalating trade tensions and its impact on global economic stability. Both Canada and Mexico are now preparing to take retaliatory actions in defense of their national interests.

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