Several weeks after President Trump’s 25% tariffs on goods from Canada and Mexico were initially imposed, they officially took effect on Tuesday, heightening tensions between the U.S. and its key trading partners. In response, Canada has moved to impose 25% tariffs on about $100 billion worth of U.S. imports, with Prime Minister Justin Trudeau accusing the U.S. of acting in “bad faith.” Meanwhile, President Trump has threatened to escalate the situation further.
Mexico’s President Andrés Manuel López Obrador also announced plans for retaliation, with specific actions expected to be revealed later this week. These tariffs, initially imposed weeks ago, are now a reality for businesses and consumers alike.
The U.S. also introduced an additional 10% tariff on Chinese imports, continuing the escalation in the U.S.-China trade conflict. In retaliation, China has imposed tariffs on U.S. agricultural products and filed a complaint with the World Trade Organization (WTO).
The immediate market response saw significant declines, with the Dow Jones falling by 670 points, while the Nasdaq Composite dropped by 0.4%. Investors flocked to gold as a safe haven, and Wall Street’s “fear gauge” rose, signaling growing concerns over the long-term impact of these trade actions.
Despite the sharp market reaction, the Canadian dollar and Mexican peso showed resilience, with some traders holding out hope that the tariffs could be short-lived.
Economists predict U.S. businesses will likely pass the cost of these tariffs on to consumers, leading to higher prices at grocery stores, car dealerships, and other retail outlets in the coming months.
U.S. Commerce Secretary Howard Lutnick has reportedly been in talks with Canada’s Finance Minister, Dominic LeBlanc, to explore a potential resolution, but for now, the trade tensions continue to build, leaving uncertainty in their wake.
