US President Donald Trump has signed executive orders imposing heavy tariffs on goods imported from Mexico, Canada and China.
Mr Trump is declaring an economic emergency to put duties of 10 per cent on all imports from China and 25 per cent on imports from Mexico and Canada – America’s largest trading partners – except for a 10 per cent rate on Canadian oil.
The White House said Mr Trump’s order also includes a mechanism to escalate the rates if the countries retaliate against the US, as they have threatened.
Mr Trump says the tariffs are to force the countries to do more to stop the flow of fentanyl into the US.
A White House sheet on the duties said they would remain in place “until the crisis alleviated,” but it did not provide details on what actions the three countries would need to take to win a reprieve.
Canada's Prime Minister Justin Trudeau retaliated by announcing 25 per cent tariffs affecting $155 billion of American goods. Seventy-five per cent of Canadian exports go to the US. Just 17 per cent of American exports go to Canada.
“We did not want this, but Canada is prepared,” he said.
Mexico's President Claudia Sheinbaum said she has instructed the economy minister to look at retaliatory measures including “tariff and non-tariff measures in defence of Mexico's interests”. She further said drug seizures have surged in the past four months, with 20 million doses of fentanyl confiscated and 10,000 suspects arrested.
The moves follow through on a repeated threat Mr Trump has made since shortly after winning last year's presidential election, and they are likely to trigger retaliation and risk igniting a trade war that could cause broad economic disruption for all countries involved.
Tariff collections are set to begin on Tuesday, according to Mr Trump's written order. But imports that were loaded on to a vessel or on to their final mode of transit before Saturday would be exempt from the duties.
Mr Trump has declared the national emergency under the International Emergency Economic Powers Act and the National Emergencies Act to back the tariffs, which allows the president sweeping powers to address crises.
The White House officials said there would be no exclusions from the tariffs. Moreover, in the case of Canada specifically, they said the “de minimis” US tariff exemption for small shipments under $800 would be cancelled.
Mr Trump, who played golf at his Mar-a-Lago estate in Florida on Saturday before signing the order, was not scheduled to speak to reporters about the tariffs. Mr Trump set the February 1 deadline to press for strong action to halt the flow of the opiate fentanyl and precursor chemicals into the US from China through Mexico and Canada, as well as to stop illegal immigrants crossing US borders.
Less than two weeks into his second term, Mr Trump is upending the norms of how the United States is governed and interacts with its neighbours and wider world.
On Friday, he pledged to proceed with the levies despite acknowledging they could cause disruption and hardship for American households.
A model gauging the economic impact of Mr Trump's tariff plan from EY chief economist Greg Daco suggests it would reduce US growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home.
That volatility was evident on Friday, when the Mexican peso and Canadian dollar both slumped after Trump vowed to fulfil his threats. US stock prices also fell and Treasury bond yields rose.
