U.S. President Donald Trump has ignited fresh trade tensions by imposing steep tariffs on imports from America’s top three trading partners. As of Tuesday, a 25% tariff on goods from Mexico

and Canada is in effect, alongside a hike in duties on Chinese imports to 20%, marking a significant escalation in trade disputes.

The tariffs, impacting nearly $2.2 trillion in annual trade, took effect at 12:01 a.m. (0501 GMT), just hours after Trump criticized all three nations for not doing enough to curb the flow of fentanyl and its chemical precursors into the U.S.

Retaliation from Trading Partners

China swiftly responded with new tariffs ranging from 10% to 15% on select U.S. imports starting March 10, while also imposing fresh export restrictions on designated American companies. Additionally, Beijing has lodged complaints with the World Trade Organization over the U.S. measures.

Canada and Mexico, long-time beneficiaries of a mostly tariff-free trade arrangement with the U.S., are preparing immediate countermeasures.

Canadian Prime Minister Justin Trudeau announced a 25% tariff on C$30 billion ($20.7 billion) worth of U.S. imports, with a potential expansion to C$125 billion if Trump’s tariffs remain in place for 21 days. Among the targeted goods are American beer, wine, bourbon, home appliances, and Florida orange juice.

“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, arguing that the move violates the U.S.-Mexico-Canada Agreement (USMCA) signed during Trump’s first term.

Ontario Premier Doug Ford warned that his province might halt nickel exports and electricity transmission to the U.S. in retaliation.

Meanwhile, Mexican President Claudia Sheinbaum is expected to announce Mexico’s countermeasures soon, according to the country’s economy ministry.

The European Union also condemned Trump’s decision, warning that it could destabilize global trade. In response, Trump has hinted at imposing “reciprocal” tariffs on EU goods.

Doubling Down on China

Trump’s new 20% duty on Chinese imports builds on previous tariff hikes, including a 10% levy imposed in early February to penalize Beijing for its role in the U.S. fentanyl crisis. These new measures add to the tariffs of up to 25% that Trump introduced during his first term on approximately $370 billion worth of Chinese goods.

Under Trump’s previous policies, tariffs on Chinese semiconductors doubled to 50%, while duties on Chinese electric vehicles soared past 100%. The latest round of tariffs now targets key consumer electronics such as smartphones, laptops, video game consoles, smartwatches, and Bluetooth devices—products that had previously been spared.

China, in turn, has retaliated by imposing tariffs on a broad range of American agricultural goods, including meats, grains, cotton, fruits, vegetables, and dairy products.

Additionally, Beijing has placed 25 U.S. firms under export and investment restrictions, citing national security concerns. Among them, ten were singled out for supplying arms to Taiwan.

China’s commerce ministry denounced the U.S. tariffs as violations of WTO rules, stating that they undermine trade relations between the two nations.

American farmers, already hard-hit by previous trade wars under Trump, could suffer further losses. His first-term tariffs cost U.S. farmers approximately $27 billion in lost exports, allowing Brazil to gain a stronger foothold in the Chinese market.

Economic Fallout

The new tariffs on Canadian and Mexican imports could significantly disrupt North America's deeply integrated supply chains, which support industries such as automotive manufacturing, energy refining, and agriculture.

“This reckless decision is pushing both the U.S. and Canada toward economic downturns, job losses, and financial instability,” said Candace Laing, CEO of the Canadian Chamber of Commerce.

She warned that these tariffs will inflate costs for both consumers and producers, disrupting supply chains and effectively acting as a tax on the American people.

Matt Blunt, president of the American Automotive Policy Council, urged Trump to exempt vehicles that meet the USMCA’s regional content requirements, highlighting the potential damage to the industry.

Even before the tariffs took effect, U.S. economic data showed a spike in factory gate prices—the highest in nearly three years—suggesting that these trade measures could further stifle production.

Following Trump’s announcement, financial markets reacted sharply. Global stocks plunged, while investors flocked to safe-haven bonds. The Canadian dollar and Mexican peso both declined against the U.S. dollar.

Expanding Trade Barriers

Since returning to office, Trump has aggressively reinstated and expanded trade barriers. In addition to these new tariffs, he has restored the 25% duty on steel and aluminum imports, which will take effect on March 12.

He has also launched a national security investigation into lumber and wood imports, a move that could lead to even steeper tariffs. Canada, which is already facing a 14.5% U.S. duty on softwood lumber, is expected to be hit particularly hard.

Further, Trump has revived a probe into foreign digital services taxes, proposed hefty fees on Chinese-built ships entering U.S. ports, and initiated an investigation into copper imports.

His broader strategy involves imposing “reciprocal tariffs” to match foreign duties and trade barriers, a move that could place additional pressure on the European Union.

A Trade War Redux?

With these aggressive trade policies, Trump appears to be reigniting the protectionist stance that defined his first presidency. However, the impact of this latest round of tariffs—on businesses, consumers, and international relations—remains to be seen.

As tensions mount, the global economy faces increasing uncertainty, with potential repercussions stretching far beyond North America. Photo by RGB2, Wikimedia commons.