U.S. President Donald Trump’s new tariffs took effect on Tuesday, with the U.S. imposing a 25% tariff on imports from Mexico and Canada, along with a 20% duty on Chinese goods. These actions, aimed at curbing fentanyl trafficking, could disrupt $2.2 trillion in annual U.S. trade and raise prices for American consumers.
China immediately retaliated with 10%-15% tariffs on U.S. imports and new export restrictions on U.S. firms, filing complaints with the World Trade Organization. Canadian Prime Minister Justin Trudeau announced 25% tariffs on $20.7 billion worth of U.S. goods, with additional tariffs planned on another $125 billion of U.S. imports if Trump’s measures persist. Mexico’s President Claudia Sheinbaum vowed retaliation, criticizing Trump’s actions as unjustified after Mexico agreed to take action against organized crime and fentanyl trafficking.
The tariffs are expected to drive up prices in the U.S., particularly on Mexican imports like avocados and electronics from China. The Federal Reserve now projects a 2.8% U.S. GDP contraction for Q1 2025, raising fears of a recession.
