China, Mexico and Canada to Retaliate after Trump Imposes New Tariffs

The Washington Post

11:45 JST, March 5, 2025

As President Donald Trump’s new tariffs on the nation’s three top trading partners took effect Tuesday, China, Mexico and Canada announced that they would retaliate with levies of their own, unleashing a potentially devastating trade war.

China imposed tariffs of up to 15 percent on a raft of U.S. farm products and blacklisted more than 20 U.S. companies, marking a major escalation in a brewing battle between the world’s two largest economies. The move targets some of the United States’ most important exports to China, including soybeans, meat and grains.

Trump is increasing tariffs on Chinese products by 10 percentage points, bringing the total tax on some Chinese products to 45 percent. He also is imposing 25 percent tariffs on goods from Mexico and Canada, in the most serious threat yet to 31 years of free-trade treaties in North America. The levies went into effect at 12:01 a.m. Eastern on Tuesday, after Trump confirmed Monday that he would not extend a month-long delay on his plan.

Late Tuesday, there were new indications that the tariffs for Canada and Mexico might be pulled back, with Commerce Secretary Howard Lutnick saying Trump would “probably” lower the tariffs on Canada and Mexico that he had announced just 24 hours earlier.

Earlier in the day at a news conference, Canadian Prime Minister Justin Trudeau decried the “American trade war,” warning that “it is going to hurt all of us.”

“The excuse that he is giving for these tariffs today of fentanyl is completely bogus,” Trudeau said.

“So we actually have to fold back on the one thing he has said repeatedly: that what he wants is to see the complete collapse of the Canadian economy because that will make it easier to annex us. … That’s never going to happen,” he said.

While Trudeau said finding a resolution to the trade fight would be his top priority, he added that Canada will impose tariffs on roughly $107 billion worth of U.S. products. About $21 billion worth of those goods would be hit immediately, he said, with the rest taking effect in 21 days.

Trump, responding in a social media post, said U.S. tariffs “will immediately increase by a like amount” to any reciprocal tariff from Canada.

Mexican President Claudia Sheinbaum said Tuesday morning that her government was also prepared to impose retaliatory tariffs. She told reporters that she will announce them Sunday at a rally in the Zocalo, the country’s main square, in Mexico City.

Sheinbaum blasted “an offensive, defamatory and baseless communiqué published by the White House about Mexico, which we firmly deny and categorically condemn.” The U.S. statement had said cartels “operate unhindered due to an intolerable relationship with the government of Mexico.”

Mexico’s economy is heavily dependent on trade with the United States, and the tariffs could spark a recession. About 80 percent of Mexico’s exports go to its northern neighbor. But the country’s manufacturing sector has become increasingly integrated with factories in the United States – meaning that any tariffs on Mexican-made goods may boomerang for U.S. companies, particularly in the auto industry.

Sheinbaum said she and Trump had agreed to a telephone call, probably Thursday, to discuss the tariffs.

Trump said he did not expect Beijing to “retaliate too much,” but only hours later, China’s State Council, the equivalent of its cabinet, announced a 15 percent tax on U.S. goods including chicken, wheat and corn. Other American products – including soybeans, sorghum, beef, pork, seafood, dairy products, and fruits and vegetables – will be subject to a 10 percent levy.

Fifteen U.S. companies, including Leidos and General Dynamics Land Systems, were placed on a list that bars them from importing goods that can be used for military purposes. Another 10 American companies were barred from trading with or investing in China.

Ministry of Foreign Affairs spokesman Lin Jian said Tuesday that if Washington “insists on starting a tariff war, a trade war or any kind of war, China will fight to the last.”

China’s Commerce Ministry earlier called Trump’s tariffs a violation of international trade rules and an example of American “unilateralism and bullying.”

The Chinese tariffs will go into effect March 10 and could hit billions of dollars’ worth of U.S. goods.

China is the largest market for American farm products, accounting for 17 percent of total U.S. agricultural exports in 2023, according to data from the U.S. Agriculture Department.

China last year imported almost $20 billion in soybeans, corn, cotton and the other U.S. farm products that will be subject to the new tariffs, according to USDA data. Those products accounted for about 80 percent of all U.S. agricultural exports to China.

By late afternoon, futures tied to wheat and corn had shed about 2 percent and 1 percent, respectively.

The tariff news sent the U.S. major indexes reeling for a second day in a row. The Dow Jones Industrial Average slid 670 points, or more than 1.5 percent, to close at 42,520.99. The S&P 500 shed 1.2 percent to settle at 5,778.15, while the tech-heavy Nasdaq dipped more than 0.3 percent to end at 18,285.16.

Best Buy shares tumbled 13.3 percent after its chief executive said the Trump levies made price increases “highly likely” for Americans. Other consumer goods companies also slumped, including Wayfair and Whirlpool, which fell 8.1 percent and 7.9 percent, respectively. VF Corp., which lists Vans and Timberland among its labels, slumped 7.4 percent.

The nascent trade war began shortly after Trump’s return to the White House and has ratcheted up quickly, involving China as well as U.S. partners.

In early February, Trump imposed 25 percent levies on Canadian and Mexican merchandise, saying they weren’t doing enough to stop the movement of fentanyl and migrants over U.S. borders. (Canada is the source of a minuscule amount of those flows.) The president then delayed the tariffs by one month as the two countries scrambled to beef up border security. Nonetheless, Trump went ahead with the penalties Tuesday.

At the same time, he slapped a 10 percent tax on Chinese imports, saying that China had also failed to stem the flow of fentanyl to the United States.

China responded with 15 percent tariffs on imports of U.S. coal and liquefied natural gas, as well as a 10 percent tariff on agricultural equipment and crude oil, restrictions on exports of minerals used to make high-tech products, an antitrust investigation of Google and the blacklisting of two other U.S. companies.

At the time, analysts said Beijing’s response was relatively restrained as it targeted only certain products. It was a sign that Chinese leader Xi Jinping, facing a slowing economy and an increasingly disenchanted public, could be open to striking a trade deal with Trump, they said.

But the president’s latest announcement and Beijing’s response raise the likelihood that the two countries will become embroiled in a cycle of retaliatory tariffs, experts say.

“Trump is swinging his tariff stick harder and harder,” said Zhu Feng, director of the Institute of International Studies at Nanjing University.

“The trade war is a huge disruption and blow to the normal economic and trade relations between China and the United States, and it will certainly bring new and significant pressure to China’s economy and development,” he said.

While the leaders of Canada and Mexico have held talks with the U.S. president to try to reach agreements, Xi and Trump have had no such conversation. Top officials including Treasury Secretary Scott Bessent and Secretary of State Marco Rubio have had calls with their Chinese counterparts, but Trump suggested this month that he was in no rush to speak to Xi.

During his first term, Trump placed tariffs on Chinese products to try to reduce China’s trade surplus with the United States, resulting in a two-year tit-for-tat trade war. In a deal that was struck in 2020, China pledged to buy an additional $200 billion in U.S. goods over two years but ultimately failed to fulfill its pledge.

The new U.S. measures will result in levies as high as 45 percent on some Chinese goods that were already targeted during Trump’s first term, including home appliances, electronics, clothing and machinery.

Chinese state media and commentators have been stressing that Beijing has been preparing for a second trade war by focusing on new export markets and launching stimulus measures at home.

China has sought to reduce its reliance on the United States by buying more farm products from other countries. But in China’s slowing economy, ordinary people will probably still suffer from the higher prices.

“China’s main concern now is to improve its situation at home – build moats and fortresses – and wait for the U.S. to make an offer before a tough battle comes,” said Zhao Minghao, deputy director of the Center for American Studies at Fudan University.