Donald Trump sparks trade war by issuing steep tariffs on Canada, Mexico and China

PALM BEACH, Fla. — President Donald Trump on Saturday signed an order to impose stiff tariffs on imports from Mexico, Canada and China, drawing swift retaliation from the country’s North American neighbors in an emerging trade war.

The Republican president posted on social media that the tariffs were necessary “to protect Americans,” pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the U.S. The action fulfilled one of Trump’s commitments to voters but threw the global economy and Trump’s own political mandate to lower prices into turmoil.

The tariffs, if sustained, could cause inflation to significantly worsen, possibly eroding voters’ trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.

Trump declared an economic emergency in order to place duties of 10 percent on all imports from China and 25 percent on imports from Mexico and Canada. Energy imported from Canada would be tariffed at 10 percent. In Maine, that would include heating oil that makes up virtually all of the market here and electricity that flows into rural areas.

The action provoked an economic standoff with America’s two largest trading partners in Mexico and Canada. Mexico’s president immediately ordered retaliatory tariffs and Canada’s prime minister said the country would put matching 25 percent tariffs on up to $155 billion in U.S. imports. China did not immediately respond to Trump’s action.

Trump’s order includes a mechanism to escalate the rates charged by the U.S. against retaliation by the other countries, raising the specter of an even more severe economic disruption.

Canadian Prime Minister Justin Trudeau on Saturday said that Canadian duties on $30 billion in trade in American alcohol and fruit will take effect Tuesday, when the U.S. tariffs go into effect. He opened his address to Canadians with a message aimed at American consumers.

“It will have real consequences for you, the American people,” he said, saying it would result in higher prices on groceries and other goods.

Trudeau channeled the views of many Canadians who were feeling betrayed by their neighbor and longtime ally, reminding Americans that Canadian troops fought alongside them in Afghanistan and helped them respond to myriad crises from wildfires in California to Hurricane Katrina.

Mexican President Claudia Sheinbaum said she had instructed her economy secretary to implement a response that includes retaliatory tariffs and other measures in defense of Mexico’s interests.

“We categorically reject the White House’s slander that the Mexican government has alliances with criminal organizations, as well as any intention of meddling in our territory,” Sheinbaum wrote in a post on X.

Meanwhile, the premier of the Canadian province of British Columbia, David Eby, called on residents to stop buying liquor from U.S. “red” states and said it was removing American alcohol brands from government store shelves as a response to the tariffs.

The tariffs will go into effect on Tuesday, setting a showdown in North America that could potentially sabotage economic growth. A new analysis by the Budget Lab at Yale laid out the possible damage to the U.S. economy, saying the average U.S. household would lose the equivalent of $1,170 in income from the taxes. Economic growth would slow and inflation would worsen — and the situation could be even worse if the countries retaliate.

A senior U.S. administration official, insisting on anonymity to brief reporters, said the lower rate on energy reflected a desire to minimize any disruptive increases on the price of gasoline or utilities. That’s a sign White House officials understand the gamble they’re taking on inflation. Price spikes under former President Joe Biden led to voter frustration that helped to return Trump to the White House last year.

The order signed by Trump contained no mechanism for granting exceptions, the official said, a possible blow to homebuilders who rely on Canadian lumber as well as farmers, automakers and other industries.

The Trump administration put the tariffs in place to force the three countries to stop the spread and manufacturing of fentanyl, in addition to pressuring Canada and Mexico to limit any illegal immigration into the United States.

The order would also allow for tariffs on Canadian imports of less than $800. Imports below that sum are currently able to cross into the United States without customs and duties.

Two of Maine’s statewide elected officials, Democratic Gov. Janet Mills and Republican U.S. Sen. Susan Collins, have criticized the tariffs, fearing major price hikes on heating oil prices as well as hits for lobstermen, farms and the forest products industry. Rep. Jared Golden, a Democrat from the 2nd District, issued a statement backing the tariffs.

“The president campaigned on bringing down the price of eggs, bread, heat, housing and cars,” Mills said in a Friday statement. “These tariffs will do the opposite.”

Story by Zeke Miller and Josh Boak. Miller reported from Washington. Associated Press writers Christopher Sherman, Rob Gillies and Paul Wiseman and BDN writer Michael Shepherd contributed to this report.