Trump spurs trade war by slapping tariffs on China, Canada, Mexico to 'protect Americans' from 'illegal aliens and deadly drugs'

US President Donald Trump imposed a 25% tariff on Canadian and Mexican imports and a 10% on goods from China to address a “national emergency” over illegal immigration and fentanyl and to “protect Americans” from “illegal aliens and deadly drugs”, White House officials said on Feb 1.

Trump had been threatening the tariffs to ensure greater cooperation from the neighboring countries to stop “illegal immigration” and the smuggling of chemicals used for fentanyl. He has also pledged to use tariffs to boost domestic manufacturing and raise revenues for the federal government.

“Today, I have implemented a 25% Tariff on Imports from Mexico and Canada (10% on Canadian Energy), and a 10% additional Tariff on China. This was done through the International Emergency Economic Powers Act (IEEPA) because of the major threat of illegal aliens and deadly drugs killing our Citizens, including fentanyl.” Trump said in a post on his Truth Social platform.

“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 favor of it,” he added.

Meanwhile, after Canada and Mexico, China also reacted to the additional 10% tariff imposed on Beijing and said that it was a 'serious violation' of the World Trade Organization rules.

Trump has declared a “national emergency” under the International Emergency Economic Powers Act to back his move legally. This allows the US President to assume sweeping powers to address the crises.

The order appeared to spare Canada's energy exports to the US by imposing a 10% duty, compared to full 25% charged on Mexican energy imports.

According to White House officials there would be “no exemptions” from the tariffs. The order also cancelled the “de minimis” clause that exempted tariffs on smaller shipments valued under $800 from Canada.

According to Trump's order, the tariffs will be implemented on Feb 2 at 12:01 a.m. EST (05:01 GMT). Goods under transit and those entering the US border before the cut-off time will be exempt from duties.

The White House officials said the tariffs would be implemented “until the crisis is alleviated”. However, the officials did not provide details on actions the three countries are expected to take to get an exemption from Trump's tariff orders.

EY Chief Economist Greg Daco was quoted as saying by Reuters that the tariffs would reduce US economic growth by 1.5% this year and push Canada and Mexico into a recession.

“We have stressed that steep tariff increases against U.S. trading partners could create a stagflationary shock - a negative economic hit combined with an inflationary impulse - while also triggering financial market volatility,” Daco said.

Canada announces counter-tariffs

Canada will retaliate against Trump’s new tariffs by imposing 25% tariffs on US goods from drinks to appliances, Prime Minister Justin Trudeau said on Feb 1.

As relations between the long-time allies who share the world's longest land border reach a new low, Trudeau told a news conference he was slapping tariffs on C$155 billion ($107 billion) of US goods. Those on C$30 billion will take effect on Tuesday, the same day as Trump's tariffs, and duties on the remaining C$125 billion in 21 days, he said.

Trudeau's announcement came just hours after Trump ordered 25% tariffs on Canadian and Mexican imports and 10% on goods from China, risking a trade war that economists say could slow global growth and reignite inflation.

China vows retaliation

The Chinese Commerce Ministry on Feb 1 said that it will "challenge US tariffs under WTO".

In a statement, Beijing said that there are "no winners in a trade war or tariff war". It added that the additional duties would "inevitably affect and damage future bilateral cooperation on drug control".

China urged Washington to engage in "frank dialogue and strengthen corporation". While firmly opposing the US tariffs, China vowed to launch "corresponding countermeasures" against Trump's move.

Notably, China was already facing tariffs, on top of which now Trump has imposed another 10 %.

Mexico calls for collaboration

Mexico's President Claudia Sheinbaum Pardo on Feb 1 rejected Donald Trump's accusations of Mexico's alleged alliances with criminal organizations. She emphasized Mexico's commitment to combating crime and drug trafficking, highlighting the need for cooperation between neighbouring countries.

This comes after Trump announced a 25 % tariff on imports from Canada and Mexico, as well as a 10 % tariff on goods from China, citing concerns over illegal immigration and the smuggling of drugs, including fentanyl.

Sheinbaum emphasized the importance of collaboration between neighboring countries, stating, "Mexico does not want confrontation. We start with collaboration between neighbouring countries. Mexico not only does not want fentanyl to reach the United States but anywhere."