‘Mutually Assured Destruction’

Canada and Mexico over the weekend said they would implement a series of retaliatory tariffs in response to US President Donald Trump’s sweeping import levies, escalating a trade war that could have far-reaching economic consequences between the allies and on global trade, ABC News reported.

The US tariffs, set to take effect this week, include a 25 percent tax on all Canadian and Mexican imports, with Canadian energy facing a lower rate of 10 percent. There is already a 10 percent tariff on all China exports to the US.

Canadian Prime Minister Justin Trudeau said Canada would impose 25 percent tariffs on more than $106 billion worth of US goods, with an initial $20 billion taking effect Tuesday and the remainder within three weeks, according to the BBC.

Mexican President Claudia Sheinbaum also announced countermeasures, including tariffs on pork, cheese, steel, and fresh produce. She emphasized that Mexico was forced to defend its economic interests and called the US tariffs “one of the heaviest attacks Mexico has received in its independent history.”

Meanwhile, Beijing announced plans to challenge the tariffs at the World Trade Organization and issue a series of unspecified “countermeasures,” noted the Canadian Broadcasting Corporation.

The White House claimed the tariffs are necessary to pressure China, Mexico, and Canada to crack down on drug trafficking and illegal immigration.

Trudeau dismissed the justification, claiming that less than one percent of the fentanyl going to the US comes from Canada. Sheinbaum rejected the allegations that the Mexican government is allied with drug cartels as “slander.”

She reiterated her administration’s record of cracking down on the drug trade, pointing to the seizure of 20 million fentanyl doses and the arrest of more than 10,000 drug traffickers, Reuters wrote.

Economists warned the tariffs could drive up prices for American consumers, particularly for food, gasoline, and automobiles. Mexico and Canada supply 70 percent of crude oil imports into the US, with analysts estimating that the tariffs could raise gas prices by as much as 70 cents per gallon.

Prices of fresh produce, dairy, and auto parts are also expected to rise.

Christopher Sands, director of the Wilson Center’s Canada Institute, told the BBC that the tit-for-tat tariffs were “mutually assured destruction,” warning that the economic impact would be immediate.

Trudeau urged Canadians to shift their purchasing habits in response, encouraging them to buy domestic products instead of US imports, while reconsidering vacations to Florida. Still, he also acknowledged that “our nation could be facing difficult times in the coming days and weeks.”

Observers estimated that if the tariffs remain in place for a year, Mexico’s gross domestic product could contract by four percent due to a projected 12 percent decline in exports.

Despite the mounting economic pressure, Trump has signaled that additional tariffs could be imposed if Canada and Mexico continue to retaliate, which could further upend North America’s deeply integrated economy.