China, Canada retaliate with counter-taxes as US tariffs go into effect

China and Canada have announced tit-for-tat tariffs against the United States after the latter’s President Donald Trump’s new sweeping tariffs against these countries and Mexico went into effect on Tuesday (March 4).

Mexico did not immediately detail any retaliatory measures.

New tariffs implemented

Starting midnight Tuesday, imports from Canada and Mexico will now be taxed at 25 per cent in the US, with Canadian energy products subject to 10 per cent import duties.

The 10 per cent tariff that Trump placed on Chinese imports in February was doubled to 20 per cent, on top of tariffs of up to 25 per cent imposed by Trump during his first term on some $370 billion worth of US imports.

The 20 per cent tariff will apply to consumer electronics imported by the US from China, including smartphones, laptops, videogame consoles, smartwatches, speakers, and Bluetooth devices.

Also read: Warren Buffet calls Trump's steep tariffs on Canada, Mexico as 'an act of war'

Beijing targets farm exports

Beijing retaliated on Tuesday with tariffs of 10 to 15 per cent on a wide array of US farm exports. It also expanded the number of US companies subject to export controls and other restrictions to 25.

“Beijing will impose an additional 15 per cent tariff on US chicken, wheat, corn and cotton and an extra 10 per cent levy on US soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from March 10,” the Chinese finance ministry announced in a statement.

Canada’s 21-day plan

Canadian Prime Minister Justin Trudeau on Monday said his country would respond to the “unjustified” US tariffs by slapping counter-tariffs on American goods worth more than USD 100 billion over the course of 21 days.

“The dialogue will continue, but we are ready to respond,” Canadian Defence Minister Bill Blair said in Ottawa as he went into a special Cabinet meeting on US-Canada relations.

Shortly after Blair spoke, Trudeau said Canada would impose 25 per cent tariffs on Canadian $155 billion (USD 107 billion) worth of American goods, starting with tariffs on Canadian $30 billion (USD 21 billion US) worth of goods immediately and on the remaining amount on American products in three weeks.

“Our tariffs will remain in place until the US trade action is withdrawn, and should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau said.

Also read: India can use US tariff threat to negotiate mutual cuts: Panagariya

Only Mexico has so far adopted a more measured stance, with President Claudia Sheinbaum saying the country has “backup plans”. Speaking at a morning press conference on Monday, Sheinbaum said, “We have a plan B, C, D,” without divulging the specifics.

Easiest path to prosperity

Trump’s moves have raised fears of higher inflation in the US and the prospect of a devastating trade war even though he has promised the American public that taxes on imports are the easiest path to national prosperity.

“It’s a very powerful weapon that politicians haven’t used because they were either dishonest, stupid or paid off in some other form,” Trump said Monday at the White House. “And now we’re using them.”

Trump has said the tariffs will only come down if the US trade imbalance closes, a process unlikely to be settled on a political timeline. He might also impose more tariffs on India, the European Union, computer chips, autos and pharmaceutical drugs.

Also read: Trump now wants US govt to consider tariffs on copper

Economic fear grows in US

Damon Pike, technical practice leader for customs and trade services at the tax and consulting firm BDO, suggested to news agency AP that the responses of other countries could escalate trade tensions and possibly increase the economic pressure points.

“Canada has their list ready,” Pike said. “The EU has their list ready. It’s going to be tit for tat.”

Greg Ahearn, president and CEO of The Toy Association, said the 20 per cent tariffs on Chinese goods will be “crippling” for the US toy industry, as nearly 80 per cent of toys sold in the US are made in China.

(With agency inputs)