WASHINGTON, USA — Hours after President Donald Trump signed an executive order imposing new tariffs on imports from Canada, Mexico, and China, all three countries slammed the decision and promised retaliatory measures, raising the prospect of escalating economic tensions.
Canada and Mexico, two of the United States’ closest trading partners, said they would impose counter-tariffs on American goods, while China announced it would file a lawsuit with the World Trade Organization (WTO) and take unspecified “necessary countermeasures.”
The move marks the latest escalation in Trump’s efforts to pressure the three nations over fentanyl production and immigration, which the White House cited as justification for the 25% tariffs on imports from Mexico and Canada and 10% tariffs on goods from China.
Canada Retaliates with $106 Billion in Tariffs
Canadian Prime Minister Justin Trudeau unveiled the most detailed response so far, announcing that Canada would place 25% tariffs on $155 billion CAD ($106 billion USD) worth of American goods.
“Like the American tariffs, our response will also be far-reaching and include everyday items such as American beer, wine and bourbon, fruits and fruit juices, including orange juice, along with vegetables, perfume, clothing, and shoes,” Trudeau said at a news conference late Saturday.
He added that the tariffs would also target major U.S. exports such as household appliances, furniture, sports equipment, lumber, and plastics.
The first $30 billion CAD ($20 billion USD) in tariffs will take effect on Tuesday, the same day the U.S. tariffs on Canadian goods are set to begin.
The remainder will be implemented in three weeks, allowing Canadian businesses time to adjust supply chains, Trudeau said.
Directly addressing Americans, Trudeau warned that Trump’s move would have economic consequences for U.S. consumers and urged Canadians to “do their part” by prioritising Canadian-made products and considering domestic travel over vacations to the U.S.
Mexico Prepares ‘Plan B’ Response
Mexican President Claudia Sheinbaum took to social media, instructing her Secretary of the Economy to implement “Plan B”, a package of tariff and non-tariff measures aimed at defending Mexico’s economic interests.
While details have yet to be announced, Sheinbaum rejected Trump’s justification for the tariffs, particularly claims that Mexico has been complicit in the flow of fentanyl into the U.S.
“Mexico not only does not want fentanyl to reach the United States, it does not want it to reach anywhere,” she said in a post on X.
She called for “cooperation, not subordination”, saying that the U.S. should address domestic demand for illicit drugs rather than blaming Mexico.
China Files WTO Lawsuit, Warns of Countermeasures
China’s Commerce Ministry responded with sharp condemnation, announcing plans to file a lawsuit with the World Trade Organization (WTO) over the tariffs while vowing to take necessary countermeasures.
“China calls on the U.S. to correct its mistakes, work toward mutual understanding, engage in candid dialogue, strengthen cooperation, and manage differences on the basis of equality, mutual benefit, and mutual respect,” the ministry said in a statement.
Though China did not immediately outline specific retaliatory measures, trade analysts suggest Beijing could impose its own tariffs, restrict access to Chinese markets, or cut off supplies of critical raw materials and components used by U.S. companies.
While the U.S. has blocked the WTO’s appellate court from functioning, rendering it largely unable to resolve disputes, China could still use the case to rally international support against the U.S. tariffs.
U.S. Justification and the Risk of a Trade War
Trump justified the tariffs by citing fentanyl and immigration, writing on Truth Social that they were necessary to stop “the major threat of illegal aliens and deadly drugs killing our Citizens.”
Data from U.S. Customs and Border Protection (CBP), however, shows that the vast majority of fentanyl seizures occur at the southern border, not the northern border.
Both Mexico and China have previously argued that the U.S. should focus on domestic demand for fentanyl rather than solely blaming external actors.
China’s Foreign Affairs Ministry warned that the tariffs could undermine future counter-narcotics cooperation between the two countries.
“Additional tariffs are not constructive and bound to affect and harm the counternarcotics cooperation between the two sides in the future,” a spokesperson said.
Economic Implications and Industry Backlash
The U.S., Canada, Mexico, and China together accounted for more than 40% of total U.S. imports last year.
Retaliatory tariffs could increase costs for American consumers, particularly on food, electronics, and automobiles.
Canada’s tariffs on U.S. lumber and aluminum could impact housing and manufacturing costs, while Mexican tariffs could hit U.S. agricultural and industrial exports.
- The U.S. Auto Industry: With vehicle components crossing borders multiple times before final assembly, the 25% tariffs could significantly raise production costs and drive up car prices for American consumers.
- The Food and Beverage Sector: Mexican tariffs could target U.S. agricultural exports, including corn, wheat, and dairy products, affecting farmers who heavily rely on Mexican markets.
- Consumer Goods: Canadian tariffs on U.S. household appliances, clothing, and alcohol could make everyday products more expensive for American consumers.
Industry groups have already begun pushing back.
“These tariffs don’t just hurt Canada. They threaten the stability of industries on both sides of the border,” said David McCall, president of the United Steelworkers International.
The U.S. Distilled Spirits Council also voiced concern, warning that retaliatory tariffs from Canada and Mexico could damage the American liquor industry.
“We are deeply concerned that U.S. tariffs on imported spirits from Canada and Mexico will significantly harm all three countries and lead to a cycle of retaliatory tariffs that negatively impacts our shared industry,” the group said in a statement.
The Shadow of Trump’s First-Term Trade Wars
Trump previously imposed sweeping tariffs on China during his first term, sparking a trade war that led to retaliatory measures against U.S. farmers and manufacturers.
While the Biden administration maintained and expanded some tariffs, many analysts concluded that Trump’s trade war failed to deliver promised economic benefits and instead increased costs for consumers and businesses.
With Canada, Mexico, and China now pushing back forcefully, analysts warn that a new trade war could further destabilize global markets and erode economic growth.
What’s next?
As Canada and Mexico prepare to implement countermeasures, businesses and lawmakers will be watching for potential further escalation—and whether Trump takes additional steps if foreign governments retaliate further.
With supply chains already strained, the coming weeks could determine whether Trump’s tariff strategy leads to renegotiation or full-scale economic confrontation.
