
PALM BEACH: President Donald Trump announced broad tariffs Saturday on major US trading partners Canada, Mexico and China, invoking emergency economic powers to do so while citing a "major threat" from illegal immigration and drugs.
Canadian and Mexican exports to the United States will face a 25 percent tariff, although energy resources from Canada will have a lower 10 percent levy, with duties starting as soon as Tuesday.
Goods from China, which already face various rates of duties, will see an additional 10 percent tariff, said Trump.
The Republican president posted on social media that the tariffs were necessary “to protect Americans," pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal migration into the U.S.
The action fulfilled one of Trump’s commitments to voters, but threw the global economy and Trump’s own political mandate to lower prices into turmoil.
The tariffs, if sustained, could cause inflation to significantly worsen, possibly eroding voters’ trust that Trump could as promised lower the prices of groceries, gasoline, housing, autos and other goods.
Washington additionally accused Mexico's government of having an "intolerable alliance" with drug trafficking groups.
The announcement threatens upheaval across supply chains, from energy to automobiles to food.
Trump has repeatedly expressed his love for tariffs, and has signaled that Saturday's action could be the first volley in further trade conflicts to come.
This week, he pledged to impose duties on the European Union in the future.
He has also promised tariffs on semiconductors, steel, aluminum, as well as oil and gas.
"Tariffs are a powerful, proven source of leverage for protecting the national interest," the White House said.
Trump, in Florida for the weekend, wrote on social media: "We need to protect Americans, and it is my duty as President to ensure the safety of all."
Opening Salvo
"The tariff action announced today makes clear that our friends, neighbors and Free Trade Agreement partners are in the line of fire," said Wendy Cutler, vice president at the Asia Society Policy Institute and a former US trade negotiator.
"The move today is an opening salvo on the tariff front," she told AFP. She noted that Canada and Mexico will face domestic pressure to retaliate.
Economic integration between the United States, Mexico and Canada -- who share a trade pact -- means stiff tariffs will have "a strong and immediate impact" in all three countries, she said.
Imposing sweeping tariffs on the three biggest US trading partners in goods carries risks for Trump, who won November's election partly due to public dissatisfaction over the economy.
Higher import costs would likely "dampen consumer spending and business investment," said EY chief economist Gregory Daco.
He expects inflation would rise by 0.7 percentage points in the first quarter this year with the tariffs, before gradually easing.
"Rising trade policy uncertainty will heighten financial market volatility and strain the private sector, despite the administration's pro-business rhetoric," he said.
Economists also expect growth to take a hit.
Trump's supporters have downplayed fears that tariffs would fuel inflation, with some suggesting his planned tax cuts and deregulation measures could boost growth instead.
Ready to respond
Trudeau said Friday that Ottawa is ready with "a purposeful, forceful" response.
Doug Ford, premier of Canada's economic engine Ontario, warned of potential job losses and a slowdown in business with tariffs. He told CNN Saturday: "We're going to stand up for what's right."
Mexican President Claudia Sheinbaum said after the announcement that she was calm as she knows "the Mexican economy is very powerful."
Sheinbaum has met Mexican business representatives, with her economy minister Marcelo Ebrard saying Saturday the private sector was closing ranks around her in the face of potential commercial "arbitrariness."
US Senate Minority Leader Chuck Schumer has warned new tariffs could "further drive up costs for American consumers."
Canada and Mexico are major suppliers of US agricultural products.
The tariffs are also expected to hit the auto industry hard, with automakers and suppliers producing components throughout the region.
Analysts have warned that hiking import taxes on crude oil from countries like Canada and Mexico threaten US energy prices too.
Nearly 60 percent of US crude oil imports are from Canada, noted a Congressional Research Service report.
Meanwhile, the Premier of Canadian province of British Columbia, David Eby, called on residents to stop buying liquor from U.S. “red” states and said it was removing American alcohol brands from government store shelves as a response to the tariffs.
In a televised message, Eby deemed the Trump’s administration decision as “a declaration of economic war against a trusted ally and friend” and that he will stand up for his citizens and all Canadians in general.
“Effective today, I have directed B.C. liquor sales to immediately stop buying American liquor from red states,” he said. “Liquor store employees will be removing the most popular of these brands from government store shelves.”