Trump’s Tariff Policy on Three Nations Marks the Start of a ‘Global Trade War’

WASHINGTON, investortrust.id – U.S. President Donald Trump’s tariff policies targeting Canada, Mexico, and China are being viewed as the initial phase of a global trade war.

“The tariffs on Canada, Mexico, and China are just the first salvo in a highly damaging global trade war,” wrote Paul Ashworth, Chief North America Economist at Capital Economics, in a note cited by CNBC on Monday, February 3, 2025.

Ashworth predicted that imports from the European Union (EU) would be targeted in the coming months, with universal tariffs—a policy Trump heavily promoted during his campaign—expected to be implemented by April.

According to Ashworth, the economic impact will be significant for all involved nations.

“With exports to the U.S. accounting for about 20% of their GDP, the current tariffs could plunge the economies of Canada and Mexico into recession by the end of this year. The surge in U.S. inflation due to these tariffs and future actions will likely be faster and larger than our initial estimates,” he explained.

Trump’s Tariff Announcement

On Saturday, February 1, 2025, President Trump imposed long-threatened tariffs on imports from Canada, Mexico, and China.

Trump signed an executive order imposing a 25% tariff on goods from Mexico and Canada, and a 10% duty on imports from China, effective Tuesday. Canadian energy resources face a lower tariff of 10% to “minimize disruptive impacts on gasoline and home heating oil prices,” according to a senior administration official.

In his executive order, Trump stated that if these nations—the U.S.’s top three trading partners—retaliate, the U.S. could “increase or expand the scope” of the tariffs already imposed.

In a post on X, Trump claimed the tariffs were enacted “due to the grave threat posed by illegal immigrants and deadly drugs killing U.S. citizens, including fentanyl.”

The U.S. trades approximately $1.6 trillion annually with Canada, Mexico, and China. These tariffs are expected to serve as both a negotiation tool and a means to push for changes in foreign policy, particularly regarding immigration and drug trade issues, by the Trump administration.

Swift Reactions from Targeted Nations

It didn’t take long for the three nations to respond. Canada reacted swiftly and decisively, while others appeared to adopt a wait-and-see approach. The EU is also closely monitoring the situation, especially after Trump recently accused the bloc of unfair trade practices.

Canada

Canadian Prime Minister Justin Trudeau immediately imposed retaliatory tariffs of 25% on $155 billion worth of U.S. goods shortly after Trump’s announcement. He stated that tariffs on $30 billion worth of U.S. goods will be implemented on Tuesday, while additional tariffs on $125 billion worth of products will be applied in the next 21 days, "to allow Canadian companies and supply chains time to seek alternative options."

“Just like the American tariffs, our response will be broad and cover everyday items such as American beer, wine, and bourbon, fruits and fruit juices, including orange juice, as well as vegetables, perfumes, clothing, and shoes,” Trudeau said during a press conference on Saturday night. “It will also include major consumer products like household appliances, furniture, and sporting equipment, as well as materials like lumber and plastics, and much more.”

Addressing Americans directly, Trudeau added: “This decision will, yes, hurt Canadians, but more than that, it will have real consequences for you, the American people.”

These retaliatory tariffs are expected to exacerbate price surges in the U.S. and elsewhere, affecting everything from cars and electronics to toys and food.

Trudeau emphasized that this situation should never have occurred. “Yes, we’ve had differences in the past, but we’ve always found a way to resolve them. As I’ve said before, if President Trump wants to bring the United States into a new golden age, a better path is to partner with Canada, not punish us,” he said.

Meanwhile, Ontario announced it would remove all American alcohol products from government-owned liquor stores starting Tuesday in response to the tariffs. The Liquor Control Board of Ontario will also remove U.S. products from its catalog, preventing other retailers from ordering or restocking these items.

Mexico

Mexico also vowed to retaliate, though specific details were not disclosed. President Claudia Sheinbaum condemned Trump’s tariffs and stated that she had instructed the economy minister to “execute Plan B, which includes tariff and non-tariff measures to defend Mexico’s interests.”

In a lengthy post on X, Sheinbaum added: “We firmly reject the White House’s slander against the Mexican government, accusing it of colluding with criminal organizations, as well as any intent to interfere in our territory.”

“Mexico does not seek confrontation. We operate on the principle of cooperation between neighboring nations,” she said. “Mexico not only does not want fentanyl entering the United States but also does not want it entering anywhere.”

“We must work together comprehensively, but always under the principles of shared responsibility, mutual trust, collaboration, and, most importantly, respect for sovereignty, which is non-negotiable. Coordination, yes; subordination, no.”

China

China announced it would file a complaint with the World Trade Organization (WTO) in response to the tariffs and take “necessary retaliatory measures.” “The unilateral tariff hikes by the U.S. seriously violate WTO rules, do not solve its own problems, and disrupt normal economic and trade cooperation between China and the U.S.,” China’s Commerce Ministry stated.

The fact that China did not immediately escalate tensions offers hope that there is still room to avoid a full-blown trade war between the two nations. 

In its statement, China refuted Trump’s claims about fentanyl, calling it a “domestic issue.” “China urges the U.S. to take an objective and rational approach to its domestic problems, including fentanyl, rather than using tariff threats against other countries,” the statement read.

European Union

The European Union expressed regret over the U.S. decision to impose tariffs on Canada, Mexico, and China and vowed to “respond firmly” if Trump targets the EU, according to a spokesperson for the European Commission. The EU is currently unaware of any additional tariffs being imposed on its products. Trump has openly criticized the U.S.-EU trade relationship, calling it unfair.

Widespread tariff measures could increase business costs, harm workers and consumers, and create unnecessary economic disruptions. Tariffs drive inflation and are detrimental to all parties involved.