This is war: Canada and Mexico fire up mass retaliation against Trump tariffs

Donald Trump has ignited a fresh trade war by pushing ahead with tariffs on Mexico, Canada and China, sparking warnings that US workers will become collateral damage.

Canada and Mexico fire up mass retaliation against Trump tariffs.

North America has descended into a bitter trade war, with Justin Trudeau accusing Donald Trump of using tariffs to punish Canada for its friendship and violating their continental free-trade agreement in the opening exchanges of a battle experts warn could cost hundreds of thousands of jobs.

In possibly his last act as prime minister before he steps down in March after months of flailing polls and personal attacks from the US President, Mr Trudeau has pleaded with ordinary Americans to stand against Mr Trump’s economic plans.

The US President announced on Saturday local time that he was proceeding with tariffs of 25 per cent on Canadian and Mexican goods, a 10 per cent tariff on Canadian energy products and a 10 per cent tariff on Chinese imports in response to a sustained influx of illicit opioids he said was threatening the fabric of American society.

His executive order said the tariffs were scheduled to enter into force on Tuesday, but warned that – in the event of retaliatory action – the President could chose to “increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.”

Addressing the American people directly in a press conference responding to the imposition of the new tariffs, Mr Trudeau acknowledged Canadians would suffer but warned that US citizens would also be harmed, their jobs placed at risk, factories potentially shuttered and prices forced upwards unnecessarily.

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…

— Justin Trudeau (@JustinTrudeau) February 2, 2025

“Tariffs against Canada will put your jobs at risk, potentially shutting down American auto-­assembly plants and other manufacturing facilities,” he said.

“They will raise costs for you, including food at the grocery store and gas at the pump. They will impede your access to an affordable supply of vital goods crucial for US security such as nickel, potash, uranium, steel and aluminium.”

He announced that Canada would respond to the US trade action with “25 per cent tariffs against $155bn worth of American goods. This will include immediate tariffs on $30bn worth of goods as of Tuesday followed by further tariffs on $125bn worth of American products in 21 days to allow Canadian companies and supply chains to seek to find alternatives.”

This will mean tariffs on a range of products ranging from American beer, wine and bourbon to fruits and juices to vegetables, to perfume, to clothing and shoes, to household appliances and furniture, to sporting goods and materials including lumber and plastics.

Ms Sheinbaum also lashed the White House, categorically rejecting its “slander against the Mexican government of having alli­an­ces with criminal organisations”.

“Mexico does not want confrontation,” she said.

“We start from collaboration between neighbouring countries. Mexico not only does not want fentanyl to reach the US, but anywhere. Therefore, if the US wants to combat criminal groups that traffic drugs and generate violence, we must work together in an integrated manner.

“Nothing by force; everything by reason and right.”

The Tax Foundation, based in Washington, has estimated that Mr Trump’s 25 per cent tariffs on both Canada and Mexico as well as a 10 per cent tariff on China would shrink economic output by 0.4 per cent, amounting to an average tax increase of more than $830 per US household in 2025 and costing 344,000 jobs.

The Chinese foreign ministry on Sunday afternoon said China “firmly deplores and opposes this move” and will take “necessary countermeasures to defend its rights and issues”.

Beijing said the tariffs were imposed “under the pretext of the fentanyl issue”, but it was “one of the world’s toughest countries on counternarcotics both in terms of policy and its implementation”.

In a separate statement, China’s Ministry of Commerce said Beijing would file a claim with the WTO and take necessary countermeasures to “safeguard its interests”.

“The unilateral tariff hikes by the US seriously violate World Trade Organisation rules,” the ministry said in a statement on Sunday, adding that the move “not only fails to address America’s own issues” but also “disrupts normal China-US economic and trade co-operation”

Posting on his Truth Social platform, Mr Trump said he was imposing the tariffs “through the International Emergency Economic Powers Act because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.

“We need to protect Americans, and it is my duty as President to ensure the safety of all. I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favour of it.”

Mr Trudeau took aim at the key justification provided by Mr Trump for the new tariffs, arguing that the border was “already safe and secure”.

He said “less than 1 per cent of fentanyl, less than 1 per cent of ­illegal crossings into the US come from Canada”.

The Canadian leader – who announced his resignation last month after the threat of US tariffs helped precipitate a political crisis within the Liberal Party – said it would have been better to tackle the scourge of fentanyl by working collaboratively with Washington, but this opportunity had been squandered.

US international trade analyst and research fellow at the Cato Institute, Clark Packard, told The Australian that “the tariffs are an enormous mistake”.

“Mexico and Canada are two of the US’s top trading partners and closest allies. They serve no economic or strategic purpose. The tariffs will raise costs for average American families and businesses with tightly integrated supply chains.

“It’s estimated that car parts, for example, can cross the border up to eight times before final assembly. Layering on a 25 per cent tariff will decimate domestic manufactures reliant on imports.”

Canada's Prime Minister Justin Trudeau acknowledged Canadians would suffer but warned that US citizens would also be harmed. Picture: Dave Chan / AFP

Assistant professor of economics at The George Washington University, Steven Hamilton, told The Australian there had been a “tendency for otherwise serious people to claim ‘This time is different’ with Trump mark 2. But these indefensible, self-destructive tariffs are confirmation that Trump is just as economically reckless as he was four years ago.

“Since the passage of NAFTA (the North American Free-Trade Agreement between the US, Canada and Mexico) more than three decades ago, the three North American economies have become tightly integrated,” he said. “Nobody foresaw it unravelling, These tariffs will simply harm manufacturers and workers who rely on imports from Canada and Mexico to maintain international competitiveness.”

Mr Trudeau said the actions taken by Mr Trump violated the renegotiated US–Mexico–Canada Agreement (USMCA) finalised in 2020. “It doesn’t have to be this way,” he said.

“If President Trump wants to usher in a new golden age for the US, the better path is to partner with Canada, not to punish us.”

On X, Mexico’s Minister for Economy Marcelo Ebrard also said US tariffs represented a “flagrant violation of the USMCA that we negotiated with President Trump himself and has been the best trade agreement in recent years!!”

“Shooting yourself in the foot!!” he said.