China and Canada unveiled retaliatory measures against the US after Donald Trump imposed his sweeping tariffs plan at midnight US time, despite warnings it could spark an escalating trade war.
US tariffs have come into force of 25% against goods from Canada and Mexico, the US’s two biggest trading partners, and 20% tariffs against China – doubling the levy on China from last month.
The duties stand to affect over $918bn worth of US imports from Canada and Mexico.
China on Tuesday said it would impose fresh tariffs on a range of agricultural imports from the US next week. Its finance ministry said additional 15% tariffs would be imposed on chicken, wheat, corn and cotton, with further 10% tariffs on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.
Asian markets tumbled on Tuesday as they opened, with Japan’s Nikkei index dropping more than two percent and Hong Kong’s Hang Seng down 1.5 percent.
Canadian prime minister Justin Trudeau said Ottawa would respond with immediate 25% tariffs on C$30bn ($20.7bn) worth of US imports. He said previously that Canada would target American beer, wine, bourbon, home appliances and Florida orange juice.
Tariffs will be placed on another C$125bn ($86.2bn) of US goods if Trump’s tariffs were still in place in 21 days.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.
Mexico’s president, Claudia Sheinbaum, was expected to announce her response on Tuesday morning, the country’s economy ministry said.
Trump and his allies claim that higher tariffs on US imports from across the world will help make America great again, by enabling it to obtain political and economic concessions from allies and rivals on the global stage.
But businesses, both inside the US and worldwide, have warned of widespread disruption if the Trump administration pushes ahead with this strategy.
Since winning November’s presidential election, the president has focused on China, Canada and Mexico, threatening the three markets with steep duties on their exports unless they reduced the “unacceptable” levels of illegal drugs crossing into the US.
While he slapped a 10% tariff on China last month, Trump has repeatedly delayed the imposition of tariffs on Canada and Mexico. The president has pledged to bring down prices in the US, but economists have warned that consumers in the country could be aversely affected by his trade plans.
A 25% tariff on Canada and Mexico and a 10% tariff on China would amount to “the largest tax increase in at least a generation”, according to the Peterson Institute for International Economics, a thinktank, which estimated such a move would cost the typical US household more than $1,200 each year.
Trump has vowed to go further, threatening to introduce “reciprocal” tariffs on countries that have their own duties on goods made in the US. He has said these will come into effect as soon as next month.
Article by:Source: Callum Jones in New York
