US unveils sweeping tariffs on Canada, Mexico, China

US unveils sweeping tariffs on Canada, Mexico, China

US President Donald Trump is targeting Canada, Mexico and China with fresh tariffs

President Donald Trump is imposing broad tariffs on major US trading partners Canada, Mexico and China, the White House said Saturday, citing an "extraordinary threat" from illegal immigration and drugs.

Canadian and Mexican exports to the United States will face a 25 percent tariff, although energy resources from Canada will have a lower 10 percent levy. The duties on Canada begin Tuesday.

Goods from China, which already face various rates of duties, will see an additional 10 percent tariff, said the White House.

Trump is invoking the International Emergency Economic Powers Act in imposing the tariffs, with the White House saying "the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency."

The aim is to hold all three countries "accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country," the White House added.

Washington accused Mexico's government of having an "intolerable alliance" with drug trafficking groups.

The announcement threatens upheaval across supply chains from energy to automobiles and food.

Trump has repeatedly expressed his love for tariffs, and has signaled that Saturday's action could be the first volley in further trade conflicts to come.

This week, he pledged to impose duties on the European Union in the future.

He has also promised tariffs on semiconductors, steel, aluminum, as well as oil and gas.

"Tariffs are a powerful, proven source of leverage for protecting the national interest," the White House said.

Trump, in Florida for the weekend, wrote on social media: "We need to protect Americans, and it is my duty as President to ensure the safety of all."

- Growth concerns -

Imposing sweeping tariffs on three key US trading partners carries risks for Trump, who swept to victory in November's election partly due to public dissatisfaction over the economy.

Higher import costs would likely "dampen consumer spending and business investment," said EY chief economist Gregory Daco.

He expects inflation would rise by 0.7 percentage points in the first quarter this year with the tariffs, before gradually easing.

"Rising trade policy uncertainty will heighten financial market volatility and strain the private sector, despite the administration's pro-business rhetoric," he said.

Trump's supporters have downplayed fears that tariffs would fuel inflation, with some suggesting his planned tax cuts and deregulation measures could boost growth instead.

Democratic lawmakers criticized Trump's plans, with Senate Minority Leader Chuck Schumer warning new tariffs could "further drive up costs for American consumers."

Canada and Mexico are major suppliers of US agricultural products, with imports totaling tens of billions of dollars from each country per year.

Tariffs would also hit the auto industry hard, with about 70 percent of light vehicles built in Canada and Mexico destined for the United States, according to S&P Global Mobility.

With automakers and suppliers also producing components throughout the region, tariffs will likely increase costs for US-made vehicles.

- Ready to respond -

Trudeau said Friday that Ottawa is ready with "a purposeful, forceful" response.

Doug Ford, premier of Canada's economic engine Ontario, warned Saturday that "the impact of these tariffs will be felt almost immediately," predicting potential job losses and a slowdown in business.

Mexican President Claudia Sheinbaum said Saturday she was calm as she knows "the Mexican economy is very powerful."

Sheinbaum has met Mexican business representatives, with her economy minister Marcelo Ebrard saying Saturday the private sector was closing ranks around her in the face of potential commercial "arbitrariness."

White House Press Secretary Karoline Leavitt, however, earlier dismissed concerns of a trade war.

Hiking import taxes on crude oil from countries like Canada and Mexico could bring "huge implications for US energy prices, especially in the US Midwest," noted David Goldwyn and Joseph Webster of the Atlantic Council.

Nearly 60 percent of US crude oil imports are from Canada, according to a Congressional Research Service report.

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Originally published as US unveils sweeping tariffs on Canada, Mexico, China