Trump declares trade war on Canada, Mexico and China, opening the door to global economic conflict

President Donald Trump will carry out his threat to impose large tariffs on Canadian, Mexican and Chinese imports on Saturday, the White House said Friday, sparking a trade war with key US partners.

“The president will be imposing tariffs tomorrow of 25% on Mexico, 25% on Canada, and 10% on China because of the illegal fentanyl that they produce and allow to be distributed in our country,” White House spokeswoman Caroline Leavitt told reporters.

Until the last minute, Canada and Mexico, which theoretically enjoy the protection of the free trade agreement that links them with the United States, hoped to avoid such an outcome.

Trump later said that China, Canada and Mexico couldn’t do anything to avoid the tariffs that Washington will impose starting Saturday, noting that they will include semiconductors, oil and steel, adding that some of these tariffs may go into effect starting February 18.

He also announced that he would definitely impose customs duties on the European Union in the future.

“Am I going to do tariffs on the European Union? You want an honest answer or should I give you a political answer? Absolutely… The European Union has treated us very terribly,” Trump told reporters in the Oval Office.

Canadian Public Safety Minister David McGuinty was in Washington on Thursday to outline a plan to boost border security between his country and the United States.

On the Mexican side, President Claudia Sheinbaum confirmed on Friday that she had discussed with the US government and made progress on various issues.

“Agreements are being reached every day,” she added.

Trump announced that the customs duties he intends to impose come in response to the inability of his country’s neighbors to confront drug smuggling into them, especially fentanyl (a very powerful opioid), as well as to stop the flow of illegal immigrants.

His nominee for commerce secretary, Howard Latnick, spoke during his confirmation hearing in Congress on Tuesday about a domestic policy arrangement, aimed simply at pushing for the closure of the border.

“I know they (Canada and Mexico) are moving quickly… If they do what is necessary, there will be no tariffs,” Latnick said Tuesday.

These measures are worrying analysts at a time when the US economy is in good shape, recording a growth rate of 2.8% in 2024.

Oxford Economics believes that if these tariffs are implemented, the United States will lose 1.2 percentage points of its growth and Mexico may suffer a recession.

But there are many unknowns: what the scope of the tariffs will be — whether they will be specific or general — and what legal tool Trump will use to justify the decision.

This action could open the door to legal action by affected countries or US companies affected by the decision, as well as through dispute resolution procedures set out in the Canada-US-Mexico Free Trade Agreement.

The economic impact of these measures could be significant for all four countries.

Meanwhile, observers are concerning about the repercussions that might be severe for the United States, but they will certainly be severe for its two neighbors, Canada and Mexico.

The GDP in Canada and Mexico would likely decline by 3.6% and 2% respectively, compared to 0.3% for the United States, and the escalation in the trade war would also backfire on China, but it would benefit in return from tensions between Mexico and Canada on the one hand and the United States on the other.

During the election campaign, Trump announced his intention to impose customs duties ranging from 10 to 20% on all products imported into the United States, and the percentage may rise to between 60 and 100% for products coming from China.

The increase was intended to compensate for the tax cuts he intends to implement during his new presidential term.

But since his election, his rhetoric has changed, as was the case during his first term, tariffs have become a weapon to force negotiations and extract compromises rather than a tool to compensate for declining tax revenues.

However, concerns remain, especially for the agricultural sector, which exports large quantities of its products to the United States.

On the Canadian side, the threat of tariffs exposed a severe political crisis that was already shaking the government of Prime Minister Justin Trudeau, who submitted his resignation.

This situation is reminiscent of the tensions that escalated last weekend between Washington and Bogota, after the latter turned back two military planes carrying migrants deported from the United States.

Trump then imposed sanctions on Bogota, including 25% and then 50% tariffs, a move that was responded to by his Colombian counterpart, Gustavo Petro, before settling the issue and agreeing on arrangements for the return of deported migrants and withdrawing the threats.