US President Donald Trump has pressed ahead with tariffs against Mexico, Canada, and China.
Trump initially vowed to bring in tariffs in February, but the measure was delayed for Mexico and Canada after a deal was reached.
Canada has retaliated with a legal complaint to the World Trade Organisation (WTO). Outgoing Prime Minister Justin Trudeau called the tariffs “very dumb”.
Tariffs
A ‘tariff’ is a tax on imports. It’s applied to foreign-made goods brought into another country, and paid by the importer.
It works like this: Country A and Country B make the same product. Country A wants its citizens to buy its own version of the product, not Country B’s, so it applies a tariff.
Importers in Country A now pay the tax when they bring in B’s product, and pass on the cost to consumers, making this version of the product more expensive to buy. It’s meant to encourage domestic production and purchasing.
US tariffs
Last month, Trump signed an executive order to impose new tariffs on the U.S’ three largest trading partners: Mexico, Canada, and China.
The duties were initially slated to come into effect in February.
Trump delayed the tariffs after Mexico and Canada agreed to boost border controls and implement measures designed to curb the flow of fentanyl, a highly potent and addictive drug prescribed for pain relief.
Today
The White House has now confirmed 25% tariffs on Mexico and Canada will come into effect.
Trump has also doubled the tariffs on China from 10 to 20%.
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In a statement, the White House said Mexico and Canada were given “ample opportunity to curb the dangerous cartel activity and influx of lethal drugs”.
“They have failed to adequately address the situation,” the statement read.
Canada response
In a press conference, Trudeau announced Canada would file a complaint with the WTO.
He added that Canada would impose 25% counter-tariffs on American goods.
"It’s not in my habit to agree with the Wall Street Journal. But Donald, they point out that even though you’re a very smart guy, this is a very dumb thing to do," Trudeau said at a press conference.
The Canadian leader resigned as PM earlier this year, but stayed on until a new leader could be elected.
His replacement is expected to be announced later this week.
Mexico response
The White House also claimed Mexican drug trafficking groups “operate unhindered due to an intolerable relationship” with the country’s government.
Mexican President Claudia Sheinbaum called these comments “offensive, defamatory, and without support”.
She added that Mexico will likely respond with retaliatory tariffs on U.S. goods.
Trump said tariffs will increase by a “like amount” to counter-tariffs.
