New Tariffs Effective Today on Canada, Mexico, and China

President Trump’s 25% tariffs on goods from Canada and Mexico went into effect today. Simultaneously, President Trump’s 10% tariff on most goods from China and Hong Kong doubled to 20% today.

The 25% tariffs on Canada and Mexico have been well on their way. However, there have been some ups and downs around expectations for them to actually hit. Originally, the tariffs had been announced to hit a month ago. But after negotiations with Canada and Mexico to increase border security, President Trump paused the tariffs for a month.

It seemed like he was really using the 25% tariffs on Canada and Mexico as negotiating threats. That made people doubt whether the tariffs would actually go into place. Then, late last month, President Trump made an announcement on Truth Social that the tariffs would indeed go into effect on March 4th (today). Most believed it to be true, but there was still thought that he may just be applying more pressure for leverage on Canada and Mexico. While those countries did increase border security, President Trump said drugs, and fentanyl in particular, were still pouring into the U.S. at unacceptable levels.

Yesterday, President Trump made it clear that there was no time for last minute negotiations. The tariffs would go into place today. He made good on his word, and they’re here.

Canada to Retaliate with Tariffs on U.S. Goods

Canada’s prime minister quickly announced he would retaliate against President Trump’s tariffs with Canadian tariffs on U.S. goods.

Josh Boak, Paul Wiseman, and Rob Gillies reported on the prime ministers response, along with his colorful rhetoric, in an AP News article:

Canadian Prime Minister Justin Trudeau said his country would plaster tariffs on more than $100 billion of American goods over the course of 21 days.

“Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said.

President Trump has said if Canada retaliates with tariff hikes, he’ll add more tariffs against Canada.

Yes, we could be looking at an all out trade war between the U.S. and Canada. But no, that’s not unexpected. Ultimately, it would be hard to believe Canada would win a trade war with the U.S. With boosting U.S. domestic manufacturing as a major goal of President Trump’s, he likely is more willing to see imported goods from our top trade partners become a less advantageous option for U.S. businesses than sourcing from within the country.

Mexico’s Response Will Come This Weekend

Mexico is giving a similar response to President Trump’s tariffs as Canada, but its president said Mexico’s retaliatory moves will be announced Sunday.

María Verza and Megan Janetsky reported in an AP News article:

President Claudia Sheinbaum said the government is “going to wait” because she had planted to speak to Trump this week. Mexico’s government has said since January it had a plan ready for this scenario.

“There is no motive or reason, nor justification that supports this decision that will affect our people and our nations,” Sheinbaum added.

Whatever they announce will likely be covered in next Tuesday’s post here in Universal Cargo’s blog.

China’s Retaliatory Tariffs

Of course, China has also announced tariffs in response to President Trump’s tariff hikes. We saw this trade war situation play out between the U.S. and China during President Trump’s first term. Ultimately, Trump won with China’s President Xi signing the Phase One Trade Agreement with the U.S. However, that victory was shortly lived with, about a week after the agreement’s execution, Covid spreading through Wuhan and then the world.

Now we’ll see if the renewed trade war plays out similarly. Perhaps it’ll find its way to an agreement between the countries faster this time.

There’s another article from the Associated Press that covers China’s response to today’s tariff hike:

China responded to new U.S. tariffs by announcing Tuesday it will impose additional tariffs of up to 15% on imports of key U.S. farm products, including chicken, pork, soy and beef, and expanded controls on doing business with key U.S. companies.

The tariffs announced by the Commerce Ministry will take effect from March 10, though goods already in transit will be exempt until April 12.

Stayed Tuned

Tariffs and trade wars will be a big topic in Universal Cargo’s blog in the weeks, months, possibly years ahead. It’s obviously a big topic affecting importers and exporters. Reciprocal tariffs that the Trump Administration is dropping to catch U.S. duties up to those of its trade partners will likely also be met with resistance in the form of retaliatory tariffs. Some tariffs may only last a matter of days until President Trump gets a deal or deals he’s looking for from other countries. On the other hand, there will likely also be tariffs that escalate back and forth between the U.S. and other countries.

At Universal Cargo, we’ll be helping shippers navigate the tariffs impacting their international shipping and trade. This blog is just one small resource we hope you’ll find useful.