North American Trade War begins as Canada and Mexico respond to Trump tariffs

A trade war between the United States and its closest North American allies and neighbors heated up over the weekend and could cause “some pain” for American consumers but would usher in a golden age, “worth the price that must be paid,” according to President Trump.

Trump, on Sunday, acknowledged that 25% tariffs he’d unilaterally imposed upon goods entering the U.S. from Canada or Mexico might inevitably impact U.S. shoppers, but said the results of his “common sense” approach to trade “will be spectacular.”

“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 all be worth the price that must be paid,” Trump said via his Truth Social media platform.

In a later communication from the White House, the administration claimed the tariffs against Canada and Mexico would stir job growth in the United States.

According to the U.S. president, a decades-long “ripoff of America” by “countries like Canada, Mexico, China, and too many others to name,” has come to an end.

“The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the ‘Stupid Country’ any longer. Make your product in the USA and there are no tariffs,” Trump wrote.

In addition to being a staunch U.S. military ally, Canada is the largest export market for most U.S. states. Mexico is the United States’ largest trading partner. The leaders of both countries responded to Trump’s late Saturday tariff order with new economic policies of their own, and Canadian Prime Minister Justin Trudeau warned that a quarrel with Canada will be felt south of the border.

“It will have real consequences for you, the American people,” Trudeau said. “As I have consistently said, tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities. It will raise costs for you, including food at the grocery store and gas at the pump.”

A trade war will also, Trudeau said, “impede” access to affordable materials currently sourced from Canada and crucial to U.S. national security, “such as nickel, potash, uranium, steel and aluminum.”

In addition, Trudeau said, Trump’s tariffs seem to violate the United States-Mexico-Canada Agreement championed and signed into law by the 47th President while he was serving as the 45th President.

That trade agreement, which replaced the longstanding North American Free Trade Agreement, represented “the largest, most significant, modern, and balanced trade agreement in history,” according to the president.

“All of our countries will benefit greatly,” Trump said in 2020.

Canada will impose 25% tariffs on $20 billion worth of U.S. imports starting on Tuesday, Trudeau said, with another $85 billion scheduled to see tariffs in the next three weeks.

“It doesn’t have to be this way,” the Canadian Prime Minister said.

China, which was hit with 10% tariffs said it would take steps to defend its economic interests and intends to file a lawsuit with the World Trade Organization.

Mexico’s President Claudia Sheinbaum Pardo has said only that her country will impose tariffs, but has not specified what products might be targeted and when.

“Problems are not resolved by imposing tariffs, but by talking and dialoguing,” she said.

Trump, also on Sunday, renewed his assertion that Canada could avoid tariffs by becoming a U.S. state. The president suggested that the U.S. pays “hundreds of Billions of Dollars to SUBSIDIZE Canada,” an apparent reference to the U.S.-Canada trade deficit. The U.S. imports more than $80 billion from Canada than it exports there, but Trump says “we don’t need anything they have.”

“We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use. Without this massive subsidy, Canada ceases to exist as a viable Country. Harsh but true! Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS,” Trump wrote.

About 60% of U.S. crude oil imports are from Canada.

Canadian Ambassador to the U.S. Kirsten Hillman said her countrymen are “perplexed” by Trump’s decision to begin a trade war with Canada, but that the Canadian people are expecting “that our government stands firm and stands up for itself.”

“We’re not at all interested in escalating, but I think that there will be a very strong demand on our government to make sure that we stand up for the deal that we have struck with the United States,” she told ABC News’ “This Week” on Sunday.

The Trump White House declared the tariffs a “necessary solution” that would “strengthen the American economy, raise wages, and create jobs,” while simultaneously claiming they come in response to an epidemic of drug overdoses.

According to the Council on Foreign Relations, tariffs are best understood as “a form of tax applied on imports from other countries” the costs for which are “largely passed on to consumers.”

“Countries around the world have long used tariffs, a tax on imports, to prop up homegrown industries by inducing citizens to buy goods produced domestically. After World War II, however, tariffs largely fell out of favor in advanced economies because they often lead to reduced trade, higher prices for consumers, and retaliation from abroad,” they wrote.

An analysis by the Budget Lab at Yale shows, if the tariffs were to continue, an average U.S. household would lose roughly $1,245 in income this year, in what would be the overall equivalent of a more than $1.4 trillion tax increase over the next 10 years.

— Material from Herald wire services used in this report.