Tariffs

USA Today -  Canada and China swiftly announced retaliatory tariffs against the U.S. on Tuesday, shortly after long-threatened levies by the Trump administration on those countries and Mexico took effect....

Canadian Prime Minister Justin Trudeau said Ottawa would respond with immediate 25% tariffs on $20.7 billion worth of U.S. imports and on another $86.2 billion if Trump's tariffs were still in place in 21 days. He said previously that Canada would target American beer, wine, bourbon, home appliances, and Florida orange juice.  "Tariffs will disrupt an incredibly successful trading relationship," Trudeau said, adding that they would violate the U.S.-Mexico-Canada free trade agreement signed by Trump during his first term.

China immediately countered the U.S. duties with 10% to 15% tariffs on some U.S. agricultural product imports.

In a press conference in Mexico City, Mexican President Claudia Sheinbaum said there was "no justification" for Trump's tariffs and that they were imposed "despite our work against gangs and fentanyl." Sheinbaum said she plans to announce Mexico's retaliatory tariffs and other measures against the U.S. on Sunday.

Tariffs are essentially taxes charged on goods imported from another country. They are typically set at a percentage of the goods' value and usually paid by the importer. The extra costs are generally passed on to the consumer.

CNN -  Federal layoffs, indiscriminate spending cuts, and the looming tariffs have put the US economy on edge, according to The New York Times. The trifecta could stunt economic growth and push inflation higher as many economists warn consumers — not foreign governments — will bear the brunt of the tariffs. As Warren Buffett put it, “the tooth fairy doesn’t pay ‘em.” Translation: Everyday items like cars, gas, t-shirts, beer, and electricity could get more expensive. Groceries? Likely those too — despite Trump spending months campaigning against rising food prices. It’s also setting the stage for a major trade war. Beijing is imposing up to a 15% tax on some American imports. Canada has moved forward with 25% counter-tariffs. And this might be just the beginning — Trump has floated a 25% import tax on goods from the European Union. Hope your wallet likes plot twists.

1440 -Broad 25% tariffs on all imports from America's two largest trading partners, Mexico and Canada, go into effect today, according to President Donald Trump's latest comments. The tariffs were delayed for a month to facilitate talks with Mexico and Canada on addressing drug trafficking and migration at the US border.

All three major US indexes slid on the news (S&P 500 -1.8%, Dow -1.5%, Nasdaq -2.6%) yesterday, with the S&P 500 posting its biggest loss since December. Nasdaq's slump was led by Nvidia, which fell nearly 9%. The Canadian dollar and Mexican peso slipped to one-month lows after Trump's comments.  

 

Mexico has already deployed 10,000 National Guard troops to its northern border, while Canada appointed a fentanyl czar, even though Canada accounts for less than 1% of fentanyl smuggled into the US (see data). China also faces a broad 20% tariff on its imported goods, up from 10% imposed last month. See how tariffs could impact consumers here.