HONG KONG — China and Canada moved swiftly on Tuesday to retaliate against newly imposed U.S. tariffs, announcing their own levies on U.S. goods. A 25% U.S. tariff on almost all goods imported from Canada and Mexico took effect just after midnight, along with an additional 10% tariff on goods from China. These three countries together accounted for over 40% of total U.S. imports last year and are also the top three U.S. export markets.
China’s government announced additional tariffs of up to 15% on some U.S. goods, including a 15% tariff on chicken, wheat, corn, and cotton, and 10% tariffs on sorghum, soybeans, pork, beef, fruits, vegetables, and dairy and fish products. Canada vowed to impose tariffs of up to 25% on American goods. Mexican President Claudia Sheinbaum is expected to announce her response at a news conference.
“The unilateral tariff increase by the U.S. harms the multilateral trade system, increases the burden on American businesses and consumers, and undermines the foundation of China-U.S. economic and trade cooperation,” China’s Customs Tariff Commission stated.
The new Chinese levies will take effect on March 10, 2025. Beijing is also filing a lawsuit with the World Trade Organization over the new U.S. tariffs, echoing previous actions taken against U.S. tariffs imposed starting February 4, 2025. Canada announced its retaliatory measures for the tariffs on $20.7 billion worth of goods would take effect immediately, with tariffs on the remaining $86.3 billion of U.S. products beginning on March 25, 2025.
Prime Minister Justin Trudeau remarked, “Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs. Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement negotiated by President Trump during his last term.”
Trudeau pointed out the influx of fentanyl from Canada is negligible, citing U.S. customs data showing only 0.2% of the more than 20,000 pounds of fentanyl seized at the U.S. border came from Canada. He noted Canada's drug enforcement efforts led to fentanyl seizures from Canada dropping by 97% from December 2024 to January 2025, reducing seizures to just 0.03 pounds.
The tariffs imposed by the Trump administration are part of broader efforts to address issues related to drug trafficking and to push trading partners to relocate operations to the U.S. Trump has emphasized the need for Mexico and Canada to improve security efforts as part of the rationale for these tariffs.
On 2025-03-03, U.S. stocks tumbled after Trump indicated the tariffs would go forward as planned, with the Dow Jones Industrial Average falling 650 points, or 1.48%, and the S&P 500 dropping 1.76%.
Ontario Premier Doug Ford said Canada would respond firmly, including potentially cutting off the transmission of electricity from Ontario to the U.S. and halting shipments of nickel, which would “shut down manufacturing” due to the heavy reliance on nickel from Ontario.
“I’m sorry to the American people; your president has decided to do this. I apologize, but he’s giving us no choice,” Ford said.
The trade disputes have sent shock waves through global markets. China’s immediate response included the addition of ten U.S. companies to its “unreliable entity” list and the imposition of export control measures on fifteen other firms, primarily those related to defense and intelligence.
Economists warn of significant repercussions for industries reliant on cross-border trade and supply chains. “Tariffs are a tax on the American people,” stated Gary Shapiro, CEO of the Consumer Technology Association. Many executives expressed concerns about the broader economic impact these tariffs could have during uncertain economic times.
While Canada and Mexico have sought to appease Trump through increased border enforcement, the tariffs' imposition signifies rising tensions and deteriorated relationships among North American neighbors. U.S. Customs and Border Protection (CBP) had already reported record low border crossings, primarily due to the increased enforcement measures.
The decision to impose tariffs has drawn scrutiny over potential backlash, with industry leaders stressing the long-term economic damage these tariffs could inflict on American households. The Peterson Institute for International Economics notes the impact could result in over $1,200 annual increase for typical households as tariffs take hold.
“Today’s reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses and economic disaster,” said Candace Laing, CEO of the Canadian Chamber of Commerce. “It’s clear we must find reciprocal measures to counter such unilateral actions.”
The tariffs, affecting over $918 billion worth of imports, incorporate products ranging from electronic devices and agricultural goods to industrial materials. American automakers will especially be tested as reliance on imported components is high.
Moving forward, it remains uncertain how these trade challenges will evolve. The stakes rise as the U.S. administration plans to introduce additional tariffs on steel and aluminum as well as foreign cars, heightening the urgency for businesses to address the shifting trade environment. Observers anticipate continued market volatility as companies and consumers grapple with the ramifications of these tariffs.