WASHINGTON (AP) 鈥� President Donald Trump Tuesday against America鈥檚 , drawing immediate retaliation from Mexico, Canada and China and sending financial markets as the U.S. faced the threat of rekindled inflation and paralyzing uncertainty for business.
Just after midnight, Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%.
with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.
Canadian Prime Minister Justin Trudeau said his country on more than $100 billion of American goods over the course of 21 days.
鈥淭oday the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,鈥� Trudeau said.
Later in the day, Commerce Secretary Howard Lutnick said the U.S. would likely meet Canada and Mexico 鈥渋n the middle,鈥� with an announcement coming as soon as Wednesday.
Lutnick told Fox Business News that the tariffs would not be paused, but that Trump would reach a compromise.
鈥淚 think he鈥檚 going to figure out, you do more, and I鈥檒l meet you in the middle in some way,鈥� Lutnick said.
Mexican President Claudia Sheinbaum said to the new taxes with its own retaliatory tariffs. Sheinbaum said she will announce the products Mexico will target on Sunday. The delay might indicate that Mexico still hopes to de-escalate Trump's trade war.
The president is abandoning the free trade policies the United States pursued for decades after World War II. He argues that open trade cost America millions of factory jobs and that tariffs are the path to national prosperity. He rejects the views of mainstream economists who contend that such protectionism is costly and inefficient.
Import taxes are 鈥渁 very powerful weapon that politicians haven鈥檛 used because they were either dishonest, stupid or paid off in some other form,鈥� Trump said Monday. 鈥淎nd now we鈥檙e using them.鈥�
Dartmouth College economist Douglas Irwin, author of a 2017 history of U.S. tariff policy, has calculated that Tuesday鈥檚 hikes will lift America鈥檚 average tariff from 2.4% to 10.5%, the highest level since the 1940s. 鈥淲e鈥檙e in a new era for sure."
As the trade disputes escalated, stocks Tuesday on Wall Street, wiping out all the gains since Election Day for the S&P 500. Markets in Europe also fell sharply.
Trump has said tariffs are intended to and illegal immigration. But he's also said the tariffs will come down only if the U.S. trade deficit narrows.
The American president has injected a disorienting volatility into the world economy, leaving it off balance as people wonder what he will do next.
During his first term, Trump only after lengthy investigations 鈥� into the national security implications of relying on foreign steel, for example, said Michael House, co-chair of the international trade practice at the Perkins Coie law firm.
But by declaring a national emergency last month involving the flow of immigrants and illicit drugs across U.S. borders, 鈥渉e can modify these tariffs with a stroke of the pen,鈥欌�� House said. 鈥淚t鈥檚 chaotic."
Democratic lawmakers were quick to criticize the tariffs.
鈥淧residents don鈥檛 get to invent emergencies to justify bad policies,鈥� said Rep. Gregory Meeks, the top Democrat on the House Foreign Affairs Committee. "Abusing emergency powers to wage an economic war on our closest allies isn鈥檛 leadership 鈥� it鈥檚 dangerous.鈥�
Even some Republican senators raised alarms. "Maine and Canada鈥檚 economy are integrated,鈥� said Sen. Susan Collins, R-Maine, explaining that much of the state鈥檚 lobsters and blueberries are processed in Canada and then sent back to the U.S.
Truck driver Carlos Ponce, 58, went about business as usual Tuesday morning, transporting auto parts from Ciudad Juarez, Mexico, to El Paso, Texas, just as he鈥檚 done for decades.
Like many on the border, he was worried about the fallout from the tariffs. 鈥淭hings could change drastically,鈥� Ponce said. Truckers could lose their jobs or have to drive farther to coastal ports as Mexican manufacturers look for trading partners beyond the U.S.
Alan Russell, head of Tecma, which helps factories set up in places like Ciudad Juarez, is skeptical that Trump鈥檚 tariffs will bring manufacturing back to the United States.
"Nobody is going to move their factory until they have certainty,鈥� Russell said. Just last week, he said, Tecma helped a North Carolina manufacturer that moved to Mexico because it couldn鈥檛 find enough workers in the United States.
U.S. businesses near the Canadian border scrambled to deal with the impact. Gutherie Lumber in suburban Detroit reached out Tuesday to Canadian suppliers about the cost of 8-foot wood studs. About 15% of the lumber at the Gutherie yard in Livonia, Michigan, comes from Canada.
Sales manager Mike Mahoney said Canadian suppliers are already raising prices. 鈥淭hey鈥檙e putting that 25% on studs.'' Builders will strain to stay within their budgets.
After years of effort and thousands of dollars in investment, Tom Bard, a Kentucky craft bourbon distiller, gained a foothold in the Canadian provinces of British Columbia and Alberta and watched his sales grow north of the border. Now Kentucky bourbon is in Canada's crosshairs, and an order from his Canadian distributors is on hold.
鈥淭hat hurts,鈥� he said. At his small distillery "every single pallet that goes out the door makes a huge difference ... The last thing you want is to have an empty spot where your bottles are supposed to be on a shelf.鈥�
Bard co-owns the Bard Distillery with his wife, Kim, in western Kentucky's Muhlenberg County, about 135 miles (217 kilometers) southwest of Louisville, Kentucky.
Trump overwhelmingly carried Kentucky in the November election. In Muhlenberg County, Trump defeated Kamala Harris by a more than 3-to-1 margin.
The China tariffs also threaten the U.S. toy industry. Greg Ahearn, president and CEO of the Toy Association, said the 20% tariffs on Chinese goods will be 鈥渃rippling,鈥� as nearly 80% of toys sold in the U.S. are made in China.
Steve Rad, CEO of the Austin, Texas-based toy maker Abacus Brands Inc., hopes to find ways to avoid raising prices in the wake of the 20% tax on Chinese goods.
The company will have to 鈥済o to war鈥� with its pricing and cost structure and figure out how to avoid penalizing consumers. For one product, a $39.99 kit that teaches children how volcanoes work, he鈥檚 thinking of switching to cheaper, lower-quality paper.
Rachel Lutz owns the Peacock Room, four women鈥檚 boutique shops with about 15 employees in Detroit. She鈥檚 been bracing for the tariffs but doesn鈥檛 understand the logic behind them.
鈥淚鈥檓 struggling to see the wisdom in picking a fight with our largest trading partner that we鈥檝e had historically wonderful relationships with,鈥� Lutz said Tuesday from her shop. 鈥淚鈥檓 struggling to really understand how they can鈥檛 see that will profoundly impact our economy in ways that I think the American consumer has not predicted. We鈥檙e about to find out."
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Gillies reported from Toronto. Associated Press writers Anne D鈥橧nnocenzio in New York; Corey Williams in Detroit; Bruce Schreiner in Louisville, Kentucky; Didi Tang and Lisa Mascaro in Washington; and Megan Janetsky and Maria Verza in Mexico City contributed to this report.
Josh Boak, Paul Wiseman And Rob Gillies, The Associated Press
