Trade war erupts as Trump hits Canada, Mexico and China with tariffs
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President Trump at the White House on Monday. Photo: Roberto Schmidt/AFP via Getty Images
President Trump's 25% tariffs on imports from Canada and Mexico, as well as new levies on Chinese imports took effect on Tuesday.
Why it matters: Trump's confirmation of the tariffs sent markets sliding amid fears it could raise prices for U.S. customers, hurt the economy and prompt a trade war.
- Canada and China took retaliatory action against U.S. products as tariffs targeting their countries took effect.
What to watch: Commerce Secretary Howard Lutnick suggested that a deal with North American allies could be announced as soon as Wednesday, opening the door for potential tariff relief.
- "I think he's going to work something out with them," Lutnick told Fox Business on Tuesday, referring to Trump.
- "It's not gonna be a pause. None of that pause stuff. But I think he's gonna figure out, 'you do more, and I'll meet you in the middle,'" Lutnick added.
Where it stands: Lutnick spoke after financial markets fell for the second straight day.
- Canada and China announced retaliatory measures after the tariffs took effect on Tuesday.
- Mexico's president, Claudia Sheinbaum, said Tuesday she would hold a rally in Mexico City in the days ahead to announce a package of response measures.
Zoom in: In a statement, Canadian Prime Minister Justin Trudeau said the nation would impose tariffs on "$30 billion worth of goods immediately, and tariffs on the remaining $125 billion on American products in 21 days' time."
- After Chinese imports were hit with an additional 10% tariff on top of the 10% Trump had imposed earlier this year, officials in Beijing announced 15% tariffs on some U.S. agriculture imports, including chicken, corn, cotton and wheat.
State of play: Trump last month struck a deal on border security with Canadian and Mexican officials and paused the tariffs for 30 days. President Trump said no progress had been made during negotiations.
- In a statement, the White House said the tariffs would "combat the extraordinary threat to U.S. national security, including our public health posed by unchecked drug trafficking."
What they're saying: Trudeau said that Canada has "worked relentlessly" to address concerns about fentanyl entering the U.S., although a minuscule amount originates from the nation.
Go deeper: Trump tariffs will cause price hikes on these everyday goods
Editor's note: This article has been updated with comments from Commerce Secretary Howard Lutnick.
Courtenay Brown contributed reporting.
