President Donald Trump’s 25% tariffs on imports from Canada and Mexico, coupled with an additional 10% levy on Chinese goods atop an earlier 10%, took effect Tuesday, rattling global markets and triggering swift retaliation from two of America’s top trade partners.
The Dow slid 2% Monday amid fears of rising consumer prices, economic strain, and a looming trade war, but Commerce Secretary Howard Lutnick hinted at a possible breakthrough with North American allies as early as Wednesday.
“I think he’s going to work something out with them,” Lutnick told Fox Business Tuesday, referring to Trump’s stance with Canada and Mexico. “It’s not gonna be a pause … but he’s gonna figure out, ‘you do more, and I’ll meet you in the middle.’” The comments followed a second day of market declines, with the tariffs—first paused last month after border security talks—now hitting $2 trillion in annual North American trade flows.
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Canada fired back immediately, with Prime Minister Justin Trudeau announcing 25% tariffs on $30 billion in U.S. goods Tuesday, followed by $125 billion more in 21 days. “Your government has chosen to raise costs for American consumers on everyday essentials,” Trudeau told Americans, dismissing Trump’s fentanyl rationale as “baseless” given Canada’s minimal role—less than 1% of U.S. seizures, per CBP.
China, facing a 20% total tariff, countered with 15% duties on U.S. agricultural exports like chicken and wheat, effective next week. Mexico’s President Claudia Sheinbaum, meanwhile, promised to unveil her own response package.
Trump, who last month delayed the tariffs after Canada and Mexico bolstered border efforts—10,000 National Guard troops from Mexico and a $1.3 billion Canadian security plan—said progress stalled. “They promised action, but I’m not seeing it,” he told reporters Monday, framing the duties as a national security fix for drug trafficking.
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The White House echoed this, citing “unchecked drug trafficking” as a public health crisis necessitating the tariffs, enacted via emergency powers.
The fallout’s already stark: Canada’s $155 billion retaliation spans beer to appliances, while China’s levies hit U.S. farmers. Sheinbaum called the U.S. move unjustified, hinting at a counterstrike that could target pork or steel.
Economists warn of a ripple effect—U.S. car prices could jump $3,000, per TD Economics, and grocery costs may soar, with Mexico supplying 90% of avocados. “This could destabilize the North American economy,” said Michael Hanson of the Retail Industry Leaders Association.
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Lutnick’s tease offers a glimmer of hope, but skepticism lingers after Trump’s hardline “no room left” stance. As markets brace and Trudeau vows not to “back down,” the tariff gambit—tied to Trump’s fentanyl fight despite a 95% drop in illegal crossings since January, per CBP—tests decades of trade ties. With Mexico’s rally looming and China eyeing a WTO challenge, all eyes are on whether diplomacy or escalation wins out.
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