Mexico retaliates with tariffs against US
What's the story
United States President Donald Trump has signed an executive order imposing new tariffs on imports from Canada, Mexico, and China. The order, signed on Saturday and effective from Tuesday, imposes a 25% tariff on goods from Mexico and Canada (except Canadian energy products taxed at 10%) and 10% on Chinese imports. This is part of Trump's strategy to protect American workers and curb illegal drugs like fentanyl into the country.
Countermeasures
Canada, Mexico respond with retaliatory tariffs
In response to Trump's executive order, Mexican President Claudia Sheinbaum announced retaliatory tariffs against the US. She also dismissed allegations of the Mexican government's involvement with criminal organizations as "slander." Meanwhile, Canadian Prime Minister Justin Trudeau declared a 25% tariff on $155 billion worth of American goods. He argued that these new US tariffs violate a recent Free Trade Agreement.
Economic impact
Tariffs could disrupt key sectors, worsen inflation
The new tariffs are likely to disrupt key sectors in Canada and Mexico such as auto manufacturing and mineral processing. Analysts also warn that these measures could worsen inflation in the US. The Budget Lab at Yale University estimates an average loss of $1,170 in annual income per US household due to the tariffs. Despite acknowledging risks like increased fuel and utility costs, the Trump administration insists these tariffs are necessary to tackle illegal immigration and drug trafficking issues.
Policy debate
Skepticism and criticism surround Trump's trade policies
Economic experts have doubted the long-term impact of Trump's trade policies. Critics say tariffs on raw materials could make US manufacturers less competitive. Democrats have slammed Trump for possibly raising prices on essential goods. The situation has heightened tensions with America's largest trading partners, Canada and Mexico. Meanwhile, reports indicate that China could challenge the US's tariffs in the World Trade Organization.