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Responding to the US tariff, Trudeau said Canada did not want it but is prepared. Mexico’s President Claudia Sheinbaum rejected US claims of her government backing criminal alliances as “slander”. Photo: @JustinTrudeau/X

Canada, Mexico retaliate after Donald Trump imposes steep tariffs

Trump’s executive order aims to protect American workers and curb the trafficking of illegal drugs like fentanyl into US territory


US President Donald Trump’s order to impose stiff tariffs on imports from Mexico, Canada and China has drawn swift retaliation and an undeniable sense of betrayal from the country’s North American neighbours as a trade war erupted among the longtime allies.

“The actions taken today by the White House split us apart instead of bringing us together,” Canadian Prime Minister Justin Trudeau said in a sombre tone as he announced that his country would put matching 25 per cent tariffs on up to $155 billion in US imports, including alcohol and fruit.

Sense of betrayal

“The United States has confirmed that it intends to impose 25% tariffs on most Canadian goods, with 10% tariffs on energy, starting February 4. I’ve met with the Premiers and our Cabinet today, and I’ll be speaking with President Sheinbaum of Mexico shortly. We did not want this, but Canada is prepared. I’ll be addressing Canadians later this evening,” Trudeau posted on X on Sunday (February 2).

Also read: Trump imposes tariffs on Canada, Mexico and China

He channelled the betrayal that many Canadians are feeling, reminding Americans that Canadian troops fought alongside them in Afghanistan and helped respond to myriad crises from wildfires in California to Hurricane Katrina. “We were always there standing with you, grieving with you, the American people,” he said.

‘Coordination, yes; subordination, no’

Mexico’s president also ordered retaliatory tariffs. China did not immediately respond to Trump’s action.

Also read: Trudeau rejects Trump’s suggestion of Canada as 51st state of US

“We categorically reject the White House’s slander that the Mexican government has alliances with criminal organisations, as well as any intention of meddling in our territory,” Mexican President Claudia Sheinbaum wrote in a post on X while saying she had instructed her economy secretary to implement a response that includes retaliatory tariffs and other measures in defence of Mexico’s interests.

“Mexico does not want confrontation. We start from collaboration between neighbouring countries. We must work together in an integrated manner, but always under the principles of shared responsibility, mutual trust, collaboration and, above all, respect for sovereignty, which is not negotiable. Coordination, yes; subordination, no,” she posted on X.

‘Fight the sale of drugs on your streets’

The Mexican president also lashed out at the US over allegations on fentanyl. She said her government had seized at least 40 tonnes of drugs in four months. This includes 20 million doses of fentanyl. This apart, over 10,000 people linked to these drug gangs had been arrested, she said.

“If the United States government and its agencies wanted to address the serious fentanyl consumption in their country, they could fight the sale of drugs on the streets of their major cities, which they don’t do and the laundering of money that this illegal activity generates that has done so much harm to its population,” she added.

Also read: Explained: What is fentanyl, the deadly opioid that US wants China to keep in check?

The premier of the Canadian province of British Columbia, David Eby, specifically called on residents to stop buying liquor from US “red” states and said it was removing American alcohol brands from government store shelves as a response to the tariffs.

Economic emergency

Trump declared an economic emergency to place duties of 10 per cent on all imports from China and 25 per cent on imports from Mexico and Canada on Saturday (February 1). Energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10 per cent rate.

Also read: If we’re subsidising Canada, Mexico, let them become US states: Trump

The order includes a mechanism to escalate the rates charged by the US against retaliation by the other countries, raising the spectre of an even more severe economic disruption.

The Republican president posted on social media that the tariffs were necessary “to protect Americans”, pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the US.

Fears of worsened inflation

The tariffs, if sustained, could cause inflation to significantly worsen, threatening the trust that many voters placed in Trump to lower the prices of groceries, gasoline, housing, autos and other goods as he promised. They also risked throwing the global economy and Trump’s political mandate into turmoil just two weeks into his second term.

The tariffs will go into effect on Tuesday, setting up a showdown in North America that could potentially sabotage economic growth. A new analysis by the Budget Lab at Yale laid out the possible damage to the US economy, saying the average household would lose the equivalent of $1,170 in income from the taxes. Economic growth would slow and inflation would worsen — and the situation could be even worse with retaliation from other countries.

Also read: Budget makes tweaks to tariff rates; can it thwart Trump’s threats?

Democrats were quick to warn that any inflation going forward was the result of Trump’s actions. “You’re worried about grocery prices. Don’s raising prices with his tariffs,” Senate Democratic leader Chuck Schumer of New York wrote in a series of posts on X. “You’re worried about tomato prices. Wait till Trump’s Mexico tariffs raise your tomato prices,” read another. “You’re worried about car prices. Wait till Trump’s Canada tariffs raise your car prices,” read another.

A gamble on inflation

A senior US administration official, speaking on condition of anonymity to brief reporters, said the lower rate on energy reflected a desire to minimize disruptive increases on the price of gasoline or utilities. That’s a sign White House officials understand the gamble they’re taking on inflation. Price spikes under former President Joe Biden led to voter frustration that helped return Trump to the White House.

The order signed by Trump contained no mechanism for granting exceptions, the official said, a possible blow to homebuilders who rely on Canadian lumber as well as farmers, automakers and other industries.

The official did not provide specific benchmarks that could be met to lift the new tariffs, saying only that the best measure would be fewer Americans dying from fentanyl addiction.

Also read: Sikhs fume as US officials raid gurdwaras in search of illegal migrants

‘Doesn’t make economic sense’

The order would also allow for tariffs on Canadian imports of less than $800. Imports below that sum are currently able to cross into the United States without customs and duties.

“It doesn’t make much economic sense,” said William Reinsch, senior adviser at the Center for Strategic and International Studies and a former US trade official. “Historically, most of our tariffs on raw materials have been low because we want to get cheaper materials so our manufacturers will be competitive ... Now, what’s he talking about? He’s talking about tariffs on raw materials. I don’t get the economics of it.”

With the tariffs, Trump is honouring promises that are at the core of his economic and national security philosophy. But the announcement showed his seriousness around the issue as some Trump allies had played down the threat of higher import taxes as mere negotiating tactics.

US against global economy

The US president is preparing more import taxes in a sign that tariffs will be an ongoing part of his second term. On Friday, he mentioned imported computer chips, steel, oil and natural gas, as well as copper, pharmaceutical drugs and imports from the European Union — moves that could essentially pit the US against much of the global economy.

Trudeau warned of economic pain as the tariffs take effect and encouraged Canadians to “choose Canadian products and services rather than American ones”. But he also voiced optimism in the enduring relationship between the two countries.

“It is going to have real consequences for people, for workers on both sides of our border. We don’t want to be here. We didn’t ask for this, but we will not back down in standing up both for Canadians and for the incredible successful relationship between Canada and the United States,” Trudeau said.

(With agency inputs)

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