Trump says Canada, Mexico, China tariffs may bring 'pain'

Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum discussed the imposition of US tariffs in a phone call, Trudeau's office said in a statement.

 "They spoke about the imposition of US tariffs on both countries, as well as their respective efforts to enhance border security and combat the production and distribution of illegal drugs," a statement said.

According to Trudeau's office, the leaders agreed to work together in areas of common interest and to enhance the strong bilateral relations between Canada and Mexico.

In contrast to Mexico, whose president has only announced the imposition of retaliatory tariffs without specifying any rate or product, Trudeau has announced that Canada will respond with a 25% tariff on $155 billion (€150 billion) worth of American goods.

US President Donald Trump has repeatedly threatened BRICS member states that he would impose a 100% tariff on their imports to the United States if they continue their efforts to create a reserve currency to rival the US dollar.

The BRICS grouping is named after its original members, Brazil, Russia, India, China and South Africa. These nations are seeking to reduce their dependence on the US dollar, the world's reserve currency, which is used for nearly 80% of global trade.

Most economists agree that the dollar-dominated financial system gives the United States major economic advantages, including lower borrowing costs, the ability to sustain larger fiscal deficits and exchange-rate stability, among others.

Russian President Putin and his Brazilian counterpart Luiz Inacio Lula da Silva are the strongest proponents of the new currency. While China has not explicitly expressed a view, Beijing has supported initiatives to reduce reliance on the dollar. India, meanwhile, is a lot more cautious about the idea.

Read more: BRICS currency: Is Trump's tariff threat justified?

On the campaign trail, Donald Trump focused a lot of attention on China, but he also called the EU a "mini-China." In late October, he warned that the bloc would pay in the end and promised to pass the "Trump reciprocal trade act."

"They don't take our cars. They don't take our farm products. They sell millions and millions of cars in the United States," he said at a rally in Pennsylvania. "No, no, no. They are going to have to pay a big price."

Trump's proposed economic policies will pose major problems for the European Union, and for Germany in particular, experts say.

The Ifo Institute calculated that a 20% duty on imported goods could cause German exports to the US to fall by around 15% and cause €33 billion ($35.3 billion) in economic damage.

The Cologne-based German Economic Institute calculated that a trade war with 10% tariffs on both sides could cost the German economy €127 billion over Trump's four-year term in the White House. Tariffs of 20% could cost the German economy €180 billion.

A tariff conflict between the US and the EU could also become a problem for the US economy. Unprovoked US tariffs would undoubtedly lead to retaliation in the form of counter-tariffs. This would make European goods more expensive for American consumers, pushing up prices in general and contributing to inflation.

Read more: Trump tariffs: Does EU have to fear trade war with US?

German politicians from various parties have reacted to Trump's tariff strategy. 

The conservative opposition Christian Democratic Union's (CDU) candidate for chancellor and apparent frontrunner in Germany's snap election in February, Friedrich Merz, expressed concern about them. "Tariffs have never been a good idea for resolving trade policy conflicts," he said.

Merz also said the cost of the tariffs will eventually burden American consumers and thus will trigger resistance in the country, adding that the European Union must now unitedly enter negotiations with the US.

Earlier, he has called for a "positive agenda" on trade with the US. He even recommended considering renewed attempts at an EU-US free trade deal, after the previous efforts, called TTIP, were shelved in 2017, early in Trump's first term.

Meanwhile, German Chancellor Olaf Scholz expressed concern about the US tariffs. He praised "the global exchange of goods and commodities" and said that "it is important that we do not divide the world with many tariff barriers".

When asked about possible European countermeasures, Scholz said that the EU is a strong economic area and has “its own options for action”. 

"Europe will not cower and hide, but instead be a constructive and assertive partner," Scholz said earlier, adding that this position will be "the basis for good cooperation with the new American president."

Economy Minister Robert Habeck, the envronmentalist Green Party's chancellor candidate, said Germany and the EU must do more to help themselves when it comes to innovation, infrastructure and new technologies amid the threat of US tariffs.

In an interview with DW, Habeck said: "Europe is prepared, should the US impose tariffs," adding that he hoped that would not be the case. Europe, he emphasized, could impose "countermeasures that would affect the American economy, including the consumer sector," but said in his eyes that would be "the wrong way" to deal with Trump.

Christian Lindner, the leader of the business-focused Free Democratic Party (FDP), said after Trump's inauguration that the relationship between Germany and the US needed "a new start."

Germany must ensure "that Europe speaks with one voice again," the former finance minister stressed. "Then we can also negotiate a new attempt at a trans-Atlantic free trade agreement, possibly with intermediate steps, instead of tariffs," he added.

US President Donald Trump shot back at criticisms of his tariff plan in a post on his media platform Truth Social.

The president seemed to be responding to an opinion piece by the editorial board of the Wall Street Journal which called Trump's tariffs "the dumbest trade war in history."

Trump reiterated his accusations that other countries such as China, Mexico and Canada are engaged in a decadeslong "ripoff of America."

"Make your product in the USA and there are no tariffs!" Trump declared.

"This will be the golden age of America. Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will be worth the price that must be paid," Trump asserted. "We are a country that is now being run with common sense  — and the results will be spectacular!"  

Trump also repeated his belief that "Canada should become our cherished 51st state." Canadian leaders, such as Prime Minister Justin Trudeau, have said the country will never join the US.   

The head of a German trade association criticized on Sunday Trump's tariffs on Canada, Mexico and China, warning that the European Union could be next under Trump's tariff policies.

"Trump's decision will cost Americans dearly - tariffs always affect both sides," Dirk Jandura, head of the German federal trade and services association BGA, was quoted by the German DPA news agency as saying.

"The losers are always the end consumers who feel the price increases at the checkout. I would hope that the tariffs can still be averted."

On Friday, Trump was asked whether he would go after EU-imported products. "Absolutely," he responded.

US allies Japan and South Korea are both assessing the potential impact of Trump's tariffs on their countries and on global trade.

Japan's finance minister said Tokyo was "deeply concerned" about the potential repercussions of the tariffs on global trade.

"We're deeply concerned about how these tariffs could affect the world's economy," Japanese Finance Minister Katsunobu Kato told a Sunday show on Fuji TV.

The minister also said it was important to "thoroughly assess" the tariffs' policy's potential impact on the foreign exchange market.

"Japan needs to scrutinise these policies and their effects, and take appropriate measures," Kato said. 

South Korea's acting President Choi Sang-mok meanwhile instructed government agencies to closely monitor any impact on domestic firms and the economy.

The Trump tariffs could impact the prices of many goods in the US, including groceries, gas and other consumer items.

Mexico and Canada are both among the US' top suppliers of fruit, vegetables, and other food items, according to the US Department of Agriculture.

Between 2017 and 2021, Mexico supplied the US with 31% of imported horticultural products including fruit, vegetables and alcoholic beverages, the department said.

Meanwhile, US Energy Information Administration statistics suggest that Canada accounts for over half the US's imported crude oil.

The US reliance on Canadian crude oil has nearly doubled in the last decade, jumping from 33% in 2013 to 60% in 2023, the administration says.

Trump's tariffs are exceptionally lower on Canadian oil imports, coming in at 10% against the 25% tariff he has imposed on other Canadian imports.

Automobiles and auto parts are also among the major imports from Canada and Mexico. Many car and electronics giants have manufacturing plants in Mexico, including Honda, Samsung and LG. 

US imports from China, meanwhile, include textile products, furniture, bedding, lamps, toys, games, sports equipment and paint, according to 2021 figures from the US Department of Commerce.

Trump had imposed tariffs on China in his first term, in a move which forced many companies in trade with the US to relocate to Canada and Mexico to evade them. These companies are now bracing for the new wave of tariffs. 

The National Retail Federation (NRF), which represents the largest retailers in the US, told Reuters news agency the White House should explore other ways to achieve its policy goals.

"As long as these universal tariffs are in place, Americans will be forced to pay higher prices on everyday consumer goods," said David French, NRF executive vice president of government relations.

 Trump is invoking the International Emergency Economic Powers Act in imposing the tariffs, with the White House saying "the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency."

In 2023, Canada and Mexico bought US goods and services worth $808 billion (€768 billion), according to the US Department of Commerce's Bureau of Economic Analysis.

At the same time, Canada and Mexico sent $1.01 trillion worth of goods to the US. The US trade deficit with Canada is over $40 billion, while the trade deficit with Mexico is over $162 billion.

Most economists think tariffs will increase prices for American consumers.

Trump hopes for a different effect.

For the US president, tariffs are a way to cut the country's "unfair" trade deficit, add to domestic manufacturing capacity through a buy American push and generate government revenue.

Additionally, tariffs are a handy tool in other negotiations like the country's war on drugs and keeping out immigrants along the southern border.

"The economic consequences of such tariffs would be severe for North America, potentially causing significant disruptions to growth and trade relations," wrote Julian Hinz last week.

The research director for trade policy at the Kiel Institute for the World Economy calculates this could lead to a 4.1% drop in GDP for both Mexico and Canada in the first year, since around three-quarters of their total exports go to the US.

Others, like the Peterson Institute for International Economics, say a 25% tariffs on Canadian and Mexican goods would cause pain for all three. For Canada it will be bad, but for Mexico it would be "catastrophic" since they are more dependent on the US. It would eventually drive up some prices in the US.

Read more here: Trump tariffs: What do they mean for Mexico and Canada?

US President Donald Trump has demanded that Beijing stem the flow of fentanyl, a deadly synthetic opioid, into the United States.

Following the tariffs announcement, Chinese diplomats said their country had "carried out extensive anti-narcotics cooperation with the United States and achieved remarkable results."                      

"Fentanyl is America's problem," China's foreign ministry said. "

The country commerce ministry also commented on the issue:

"China hopes that the United States will objectively and rationally view and deal with its own issues like fentanyl, rather than threatening other countries with tariffs at every turn," they said.

China said it "firmly opposes" the new tariffs announced by US President Donald Trump and promised "corresponding countermeasures to resolutely safeguard our own rights and interests."

China's Commerce Ministry criticized Washington's "erroneous practices" and said Beijing was "strongly dissatisfied with this and firmly opposes it."

The ministry said Beijing would file a lawsuit at the World Trade Organization.

The ministry argued that "the unilateral imposition of tariffs by the United States seriously violates WTO rules."

It added that the tariffs were "not only unhelpful in solving the US's own problems, but also undermine normal economic and trade cooperation."

The ministry expressed hopes that Washington would objectively and rationally view and deal with its own issues like fentanyl, rather than threatening other countries with tariffs at every turn."

A WTO appeal is seen as largely symbolic, with the WTO's dispute settlement system being effectively shut down since Trump blocked the appointment of judges to handle appeals in 2019, amid another tariff war with China.

However, it would give Beijing the image of standing up for the rules-based trading system which the US has long advocated for.

In a separate statement, China’s Foreign Ministry said "there are no winners in a trade war or tariff war."

"The practice of imposing additional tariffs is not constructive and will inevitably affect and damage future bilateral cooperation on drug control," a ministry spokesperson said.

Canadian Prime Minister Justin Trudeau said that Canada would be imposing tariffs on American goods in response to US President Donald Trump's import tax decision.

"Tonight I am announcing Canada will be responding to the US trade action with 25% tariffs against $155 billion worth of American goods," Trudeau said.

Trudeau began his address to Canadians with a message directed 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.

"We're certainly not looking to escalate. But we will stand up for Canada, for Canadians, for Canadian jobs," Trudeau said, as he warned of a fracture in longstanding Canada-US ties.

The announcement came after Trudeau met with Canadian lawmakers. 

"We did not want this, but Canada is prepared," Trudeau said before the announcement in a post on X.

On Friday, Trudeau had warned of a "forceful and immediate response" if the US followed through with the threat of tariffs.

US President Donald Trump signed an executive order on Saturday imposing 25% tariffs on goods from Mexico, as well as 25% on goods from Canada except for Canadian energy resources which will face 10% in tariffs. 

The duties on Canada will take effect on Tuesday. The document also imposes a 10% tariff on imports from China.

According to the White House, the executive order includes a retaliation clause, meaning further measures are possible if the targeted countries respond with measures of their own.

The move hits America's biggest trading partners. In 2023, Canada and Mexico bought US goods and services worth $808 billion (€768 billion), according to the US Department of Commerce's Bureau of Economic Analysis.

At the same time, Canada and Mexico sent $1.01 trillion worth of goods to the US. The US trade deficit with Canada is over $40 billion, while the trade deficit with Mexico is over $162 billion.

Trump invoked the International Emergency Economic Powers Act in imposing the tariffs, with the White House saying "the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency."

Mexico's President Claudia Sheinbaum accused Trump of "slander" and announced that her country would be imposing retaliatory tariffs.

"We categorically reject the White House's slander against the Mexican government of having alliances with criminal organizations, as well as any intention of intervention in our territory," said Mexico's President Claudia Sheinbaum.

Commenting on Trump's demands to curb fentanyl smuggling, the Mexican leader said her government had seized over 40 tons of drugs including 20 million doses of fentanyl over a four-month period.  Sheinbaum also said that ten thousand people had been arrested.

The Mexican leader stressed that Mexico did not want confrontation but rather collaboration and said "if the United States wants to combat criminal groups that traffic drugs and generate violence, we must work together in an integrated manner."

Sheinbaum also said that she had ordered her economy minister to implement tariff and non-tariff measures to defend Mexico's interests.

"I've instructed my economy minister to implement the plan B we've been working on, which includes tariff and non-tariff measures in defense of Mexico's interests," Sheinbaum posted on X, without specifying what US goods are expected to be targeted.

As of November 2024, Mexico was the largest US trading partner, with exports and imports of goods comprising nearly 16% of total trade, according to the US census bureau. 

rmt,dj,kb/wmr (AFP, AP, dpa, Reuters)