China slaps US exports with 15% additional tariffs; Canada fires back with 25% duties as trade war escalates

The new levies will target major American exports such as chicken, wheat, corn, and cotton.

This move signals a fresh escalation in the prolonged trade conflict between the world’s two largest economies.

US tariffs trigger global backlash

Just after midnight on Tuesday, the United States introduced sweeping tariffs on imports from China, Canada, and Mexico, pushing trade tensions to new heights.

These fresh duties have propelled US tariffs to historic levels, leaving businesses and foreign governments scrambling to respond.

As of 12:01 a.m., the Trump administration imposed a 25% tariff on all imports from Canada and Mexico, while tariffs on Chinese goods were hiked by another 10% on top of existing levies.

The White House defended the move as part of its broader push to overhaul US trade relationships.

“What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” President Trump said.

However, analysts warn that these measures could disrupt global supply chains and drive up costs for American consumers.

Canada and Mexico retaliate

Canada and Mexico, two of America’s biggest trading partners, reacted swiftly.

Canadian Prime Minister Justin Trudeau denounced the US tariffs as an “unjustified decision” and pledged retaliatory measures.

Canada responded with its own set of tariffs, slapping a 25% duty on $155 billion worth of US goods. Of that, $30 billion in tariffs took effect immediately, with the rest set to be implemented in phases.

"The first stage will see 25 per cent tariffs placed on approximately Canadian USD 30 billion (USD 20.6 billion) worth of goods from US exporters. These measures came into effect at 12:01 a.m. New York time unless the US reverses its decision," Bloomberg quoted Trudeau as saying.

"Our tariffs will remain in place until the US withdraws its trade action," he added. "Should US tariffs persist, we are actively discussing additional non-tariff measures with provinces and territories."

Meanwhile, Mexico has intensified border enforcement measures in an effort to stabilise trade relations.

The government has ramped up efforts against drug cartels and deployed 10,000 National Guard troops to curb migration flows into the US. Despite these steps, the new US tariffs have dealt a blow to Mexico’s economy, as around 80% of its exports are bound for the American market.

Mexican President Claudia Sheinbaum adopted a cautious stance, choosing to wait and assess the situation before unveiling a full response.

"We have a plan B, C, D," Sheinbaum said, declining to provide specifics. She reassured that Mexico was prepared to respond to any trade action from Washington, according to Reuters.

In an attempt to de-escalate tensions, Mexican officials recently met their US counterparts in Washington to negotiate trade and security issues. Sheinbaum described the talks as "cordial," highlighting that bilateral coordination had been "very good so far."

China’s stance

The Chinese government has sought a clear understanding of US demands. In a strong-worded statement, a spokesperson for China’s Ministry of Commerce accused Washington of “bullying” and vowed countermeasures to “safeguard its own rights and interests.”

China is somewhat insulated from the impact of these tariffs, as only about 15% of its exports are shipped to the US—far less than the dependency Canada and Mexico have on American markets.

However, the increased duties are expected to raise costs for US manufacturers that rely on Chinese materials and components.

Economic fallout and market reaction

According to a report by The New York Times, analysts warn that the escalating tariff battle could significantly slow economic growth across North America.

While President Trump has framed the tariffs as a means to strengthen border security and curb drug trafficking, he has also emphasised his broader economic agenda—reducing trade imbalances with Canada and Mexico while bringing manufacturing jobs back to the US.

Financial markets reacted sharply to the developments.

On Monday, the S&P 500 index dropped by 2% in afternoon trading, as investors grew wary of the potential impact on businesses and supply chains.

Economists caution that the tariffs could fuel inflation and further strain North American trade relations, adding uncertainty to an already fragile global economy.