Donald Trump will impose sweeping tariffs on Canada, Mexico and China on Saturday, the White House said, potentially setting the stage for a damaging trade war between the US and three of its biggest trading partners.
Goods exported from Canada and Mexico to the US will be hit with a 25% tariff, while products from China face a 10% levy, the White House press secretary, Karoline Leavitt, told reporters on Friday.
Leavitt dismissed reports that the US would delay implementation of the tariffs by a month as “false”, claiming that “starting tomorrow, those tariffs will be in place”.
Canada has pledged to retaliate with a “forceful but reasonable” response. Mexico has also drawn up plans, but declined to provide details. China has said it will “firmly defend” its interests.
Trump has claimed imposing duties on goods from overseas will raise hundreds of billions of dollars for the federal government, while forcing countries – even two of America’s closest allies – to bend to his demands.
But economists have repeatedly warned that higher tariffs, a key pillar of Trump’s economic strategy, risk raising prices for millions of Americans, challenging the president’s pledge to bring down prices “rapidly” amid a wave of frustration over the cost of living.
Investors appear apprehensive, too. Stocks on Wall Street fell after the White House press briefing, with the Dow Jones industrial average down 0.5% in New York.
After his election victory in November, the president homed in on Canada and Mexico, the US’s neighbors, and China, demanding they do more to stop “illegal aliens” and drugs such as fentanyl from crossing into the US. Trump said he would impose tariffs immediately upon entering office, but hours after his inauguration said he would do so on 1 February instead.
Mexico and Canada have insisted in recent days that they stand prepared for Trump to make good on his threat.
“We have plan A, plan B and plan C for whatever the US government decides,” Claudia Sheinbaum, the Mexican president, said on Friday. The country has previously signaled that it would “have to” respond with duties of its own if hit with US tariffs.
Justin Trudeau, the Canadian prime minister, warned of potentially “difficult times” if Trump proceeds with tariffs.
On Trudeau’s warning that Canada would put forward a “forceful but reasonable” response to US duties, Leavitt shot back at the White House press briefing: “I think Justin Trudeau would be wise to talk to President Trump directly before pushing outlandish comments like that to the media.”
Chrystia Freeland, Canada’s former trade negotiator and finance minister, who is vying to succeed Trudeau, proposed a 100% tariff on all Tesla vehicles and on US wine, beer and spirits. “We need to be very targeted, very surgical, very precise,” she told the Canadian Press – in this case, targeting the Tesla chief Elon Musk, at the heart of Trump’s inner circle.
Trump, who mooted a 20% universal tariff on all foreign imports from across the world while running for re-election, has made clear that other key markets, including the European Union, are also in his sights.
In his inaugural address, the president laid out his plan to overhaul the US’s economic ties with the world. “Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” he declared, claiming this would lead to “massive amounts of money pouring into our Treasury, coming from foreign sources”.
Tariffs are not charged on the exporter, but the importer – in this case, firms based in the US – and are often passed on to consumers. This is why economists caution that increasing duties on imports could exacerbate inflation.
Undeterred, Trump has launched a consultation into the creation of an “external revenue service” for the collection of tariffs.
The conservative Tax Foundation has estimated that Trump imposed about $80bn worth of tariffs on about $380bn worth of products in 2018 and 2019, describing it as “one of the largest tax increases in decades”. The Biden administration kept most of the tariffs in place, and increased tariffs on an additional $18bn of Chinese goods, including semiconductors and electric vehicles.
In a speech earlier this week, Trump claimed his officials would introduce tariffs on overseas semiconductors, drugs and steel “in the very near future”, singling out Taiwan and suggesting that such duties would incentivize manufacturers to make such goods in the US.
Imposing tariffs, at least using the conventional playbook, takes time. A necessary investigation requires 270 days by statute. But Trump’s officials have reportedly been exploring other options, such as the declaration of an economic emergency, in an attempt to move more quickly.
US importers, or their customs broker, are required by Customs and Border Protection to file an entry summary for goods arriving into the US, with details about their shipment, such as what it is, how much it is worth, and where it is from. Goods are assigned a specific code according to the Harmonized Tariff Schedule, which has the applicable tariff rates.
Importers are responsible for paying the duties calculated on the value of the goods they have imported.
Have a question about Trump tariffs? Wondering how they impact inflation, prices or the economy? We’re here to help. Email callum.jones@theguardian.com and we’ll answer in a future story
