China and Canada have announced retaliatory measures against the US after Donald Trump imposed his sweeping tariffs plan, despite warnings it could spark an escalating trade war.
US tariffs of 25% have come into force against goods from Canada and Mexico, the US’s two biggest trading partners, and 20% tariffs against Chinese goods – doubling the levy on China from last month.
The duties will affect more than $918bn (£722bn) worth of US imports from Canada and Mexico.
China said on Tuesday it would impose fresh tariffs on a range of agricultural imports from the US next week.
Its finance ministry said additional 15% tariffs would be imposed on chicken, wheat, corn and cotton, with further 10% tariffs on sorghum, soya beans, pork, beef, aquatic products, fruits, vegetables and dairy products. It has also raised additional complaints against the US with the World Trade Organization.
The Canadian prime minister, Justin Trudeau, said Ottawa would respond with immediate 25% tariffs on C$30bn (£16.3bn) worth of US imports. He said previously that Canada would target US beer, wine, bourbon, home appliances and Florida orange juice.
Tariffs will be placed on another C$125bn (£68bn) of US goods if Trump’s tariffs are still in place in 21 days. “Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.
Mexico’s president, Claudia Sheinbaum, said on Tuesday that there was no justification for Trump’s tariffs and said her government would respond with tariff and non-tariff measures.
Asian markets were down – after sharp falls in US markets on Monday – as Japan’s Nikkei fell 1.2%, Taiwan’s benchmark TWII index was off 0.5% and Hong Kong’s Hang Seng was down 0.3%.
The Canadian dollar and the Mexican peso fell to their lowest levels in a month on Tuesday. The US dollar index, which tracks the currency against six peers, fell to a three-month low, down 0.75%.
In Europe, the FTSE 100 dropped by 81 points, or 0.8%, a day after rising to more than 8,900 points for the first time. Germany’s Dax and Spain’s Ibex indices fell more than 2%, while France’s Cac 40 was off almost 2%.
Trump and his allies claim that higher tariffs on US imports from across the world will help “make America great again” by enabling it to obtain political and economic concessions from allies and rivals on the global stage.
Businesses, inside the US and worldwide, have warned of widespread disruption if the Trump administration pushes ahead with this strategy.
Since winning November’s presidential election, Trump has focused on China, Canada and Mexico, threatening the three markets with steep duties on their exports unless they reduced the “unacceptable” levels of illegal drugs crossing into the US.
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While he slapped a 10% tariff on China last month, Trump has repeatedly delayed the imposition of tariffs on Canada and Mexico. He has pledged to bring down prices in the US, but economists have warned that consumers in the country could be adversely affected by his trade plans.
A 25% tariff on Canada and Mexico and a 10% levy on China amounts to “the largest tax increase in at least a generation”, according to the Peterson Institute for International Economics, a thinktank that estimated the move would cost the typical US household more than $1,200 each year.
Trump has vowed to go further, threatening to introduce “reciprocal” tariffs on countries that have their own duties on goods made in the US. He has said these will come into effect as soon as next month.
The US Treasury secretary, Scott Bessent, claimed that Chinese manufacturers would swallow the US tariffs. He said on Tuesday: “China’s business model is export, export, export, and that’s unacceptable. I am highly confident that the Chinese manufacturers will eat the tariffs; prices won’t go up.”
Trump has said the tariffs on China are because the government has failed to stop illicit fentanyl entering the US, which Beijing says is a “pretext” to threaten China.
“China opposes this move and will do what is necessary to firmly safeguard its legitimate interests,” a foreign ministry spokesperson, Lin Jian, said. “If the United States … persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end.”
China’s finance ministry said: “The US’s unilateral tariff increase damages the multilateral trading system, increases the burden on US companies and consumers, and undermines the foundation of economic and trade cooperation between China and the US.”
The ministry said products shipped from the US to China that departed before 10 March and arrived before 12 April would not be subject to the tariffs.
Source: theguardian.com
