TLDR
- President Trump’s new tariffs on Canada and Mexico took effect, with a 25% levy on most imports and an additional 10% on Canadian energy exports
- Canada announced retaliatory tariffs of 25% on $20.6 billion worth of US goods immediately, with additional tariffs on $86 billion worth of products to follow in 21 days
- China responded with 10-15% tariffs on various US agricultural imports including chicken, pork, soy and beef
- Global markets tumbled after the tariffs took effect, with Asian markets and US stocks seeing significant drops
- TSMC announced plans to invest $100 billion in semiconductor plants in Arizona, bringing their total US investment to $165 billion
Global trade tensions intensified yesterday as both Canada and China announced retaliatory measures following the implementation of President Trump’s new tariffs. The measures took effect at 12:01 a.m. on March 4, 2025, creating immediate ripples across international markets.
The new US tariffs include a 25% levy on most imports from Canada and Mexico. Canadian energy exports face an additional 10% tariff. Chinese goods saw tariff increases from 10% to 20%.
Canadian Prime Minister Justin Trudeau wasted no time responding. He announced that Canada would impose immediate 25% tariffs on over $20.6 billion worth of US imports. A second round of tariffs on an additional $86 billion worth of products will take effect in 21 days.
“Canada will not let this unjustified decision go unanswered,” Trudeau stated. He made it clear that Canadian tariffs would remain in place until the US withdraws its trade action.
The Canadian response targets a wide range of US goods. Trudeau’s government is also considering non-tariff measures if the US does not reverse course.
China announces tariffs of 10-15% on US agricultural imports
China also moved quickly to counter the US tariffs. Beijing announced additional tariffs of 10-15% on various US agricultural imports. These include chicken, pork, soy and beef, which will take effect next week.
The trade dispute has already impacted global markets. Asian markets tumbled shortly after the tariffs took effect. Japan’s Nikkei index dropped by more than 2%, while Hong Kong’s Hang Seng fell by 1.5%.
US stocks had already closed sharply lower on Monday ahead of the tariff deadline. The S&P 500 fell 1.8%, the Nasdaq dropped 2.6%, and the Dow decreased by 1.5%.
Consumer confidence in the US took a hit in February. Americans are dealing with ongoing inflation and the threat of higher prices due to import taxes. Egg prices jumped more than 15% last month due to avian flu affecting laying hens.
Trump defended the tariffs during a White House event. He claimed they would punish Canada and Mexico for fentanyl trafficking. He also suggested the move would encourage car manufacturers to move production to the United States.
“I would just say this to people in Canada or Mexico: if they’re going to build car plants, the people that are doing them are much better off building here,” Trump told reporters. He cited the large US market as an incentive.
Ontario Premier Doug Ford responded strongly to the tariffs. “A tariff on Canada is a tax on Americans,” he said at a mining convention in Toronto. He threatened to cut off energy exports and nickel supplies to the US.
“If they’re going to try to annihilate Ontario, I will do everything — including cutting off their energy — with a smile on my face,” Ford stated. He encouraged other Canadian provinces to take similar actions.
Bank of Canada has warned about the impact of prolonged tariffs
The Bank of Canada has warned about the economic impact of a prolonged tariff war. It could reduce Canadian output by nearly 3% over two years and “wipe out growth” during that period.
Despite the escalating trade tensions, there was one bright spot in US-international business relations. Taiwan Semiconductor Manufacturing Company (TSMC) announced plans to invest $100 billion in semiconductor plants in Arizona.
This investment brings TSMC’s total in the United States to about $165 billion. Commerce Secretary Howard Lutnick noted that TSMC had received a $6 billion grant from the CHIPS Act, which had spurred its earlier plans to spend $65 billion on Arizona plants.
Businesses on both sides of the border face uncertainty. “Businesses can’t just switch their whole model to avoid tariffs and then go back again, depending on what politicians decide on any given day,” said Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce.
The timing of the tariffs follows weeks of speculation. Trump had originally set a February 1 deadline, then extended it to March 4. Just last week, he briefly said he would delay the tariffs until April 2, before reverting to the March date.
Asked whether there was room for negotiation on the tariff rate, Trump was firm. “No room left for Mexico or for Canada,” he said at the White House on Monday. “The tariffs, they’re all set, they take effect tomorrow.”
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