A looming trade war has gripped international markets as US President Donald Trump’s long-threatened tariffs against Canada and Mexico went into effect on Tuesday, March 4. In addition, Trump’s administration doubled a tariff on Chinese goods, escalating concerns over global economic stability.
US Tariff Implementation
Under the new policy, a 25% tariff will be imposed on all Mexican exports to the United States. Similarly, most Canadian exports will face a 25% tariff—with energy products subject to a 10% duty. Furthermore, an existing 10% tariff on Chinese goods has been increased to 20%, according to a recent executive order from the White House. Speaking at a press briefing, Trump declared, “The United States has been a laughingstock for years and years,” insisting that these tariffs are essential to compel Canada and Mexico to curb issues like undocumented migration and fentanyl smuggling.
Market Impact and Investor Reaction
The tariff announcement sent shockwaves through global financial markets. Major US indices fell sharply; the Dow Jones dropped 649.67 points (1.48%), the S&P 500 lost 104.78 points (1.76%), and the Nasdaq Composite plunged 497.09 points (2.64%). Both the Canadian dollar and Mexican peso hit their lowest levels in a month, while Indian markets also saw slight declines in early trading.
China Strikes Back
China responded swiftly to Washington’s actions by announcing counter-tariffs and export restrictions. In a press conference, China’s finance ministry detailed plans to impose 15% tariffs on several US agricultural imports—including chicken, wheat, corn, and cotton—and 10% tariffs on other products such as soybeans, pork, beef, fruits, vegetables, and dairy, effective March 10. Additionally, China placed 15 US companies, including drone maker Skydio, under export and investment restrictions and designated 10 more as “unreliable entities.” Chinese officials condemned the unilateral tariffs, arguing that they violate WTO rules and ultimately harm both nations.
Canada’s Retaliatory Measures
Prime Minister Justin Trudeau immediately announced that Canada would retaliate if American tariffs remain in place. Trudeau stated, “There is no justification for Washington’s actions,” and outlined Canada’s plan to impose a 25% tariff on C$30 billion worth of US goods beginning at 12:01 a.m. EST Tuesday. A further round of tariffs targeting C$125 billion of US products, including automobiles, steel, and aluminum, is scheduled to take effect in 21 days. Trudeau added that Canada is in ongoing discussions with its provinces and territories to implement additional non-tariff measures if necessary.
Provincial Pushback in Canada
Ontario Premier Doug Ford voiced strong opposition, warning that the tariffs would devastate the province. “If they want to try to annihilate Ontario, I will do everything — including cutting off their energy — with a smile on my face,” Ford declared. He threatened to cut off nickel shipments and cancel contracts with American firms, including a major deal with Elon Musk’s SpaceX for Starlink internet, emphasizing that Ontario would use every available tool to retaliate.
Mexico’s Cautious Response
Mexican President Claudia Sheinbaum indicated that Mexico has prepared contingency plans, promising to reveal further details soon. “In this situation, we need composure, serenity, and patience. We have Plan A, Plan B, Plan C, and even Plan D,” she stated, signaling that Mexico will also counter Washington’s tariffs, though she provided few specifics at this stage.
Economic and Global Implications
The new tariffs have ignited fears of a broader trade war, potentially disrupting one of the world’s largest bilateral trade relationships—valued at over $900 billion annually—between the United States and its neighbors. Industry experts, including billionaire investor Warren Buffett, have warned that such tariffs are akin to acts of war and could significantly hurt not only the targeted countries but also the US economy.