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Economy

Trade tensions escalate between North American allies as Trump imposes tariffs

Sunday 02 February 2025 - 14:00

US President Donald Trump's decision to implement hefty tariffs on imports from Mexico, Canada, and China has ignited a trade war among North American allies, with swift retaliatory measures from both countries. Trump cited the need to protect American citizens and curb the illicit fentanyl trade, alongside reducing illegal immigration. His tariffs, ranging from 10% on Chinese goods to 25% on those from Mexico and Canada, have raised concerns about worsening inflation and global economic instability.

Both Canadian and Mexican leaders condemned the move, expressing their sense of betrayal after years of mutual cooperation. Canada’s Prime Minister emphasized the longstanding solidarity between the two nations, particularly recalling joint efforts in military and disaster responses. Mexico, similarly, rejected the allegations of criminal alliances, vowing to defend its interests with retaliatory tariffs.

The tariffs are set to take effect soon, with experts warning of potential economic fallout. A report from Yale’s Budget Lab predicts a significant loss in household income, alongside slower economic growth and worsening inflation. Critics, especially from the Democratic party, argue that Trump's tariffs will directly lead to higher costs for everyday goods, including food, cars, and gas.

While the tariffs on energy imports from Canada are lower to avoid gas price hikes, the overall move signifies a tough stance on trade imbalances, with the White House signaling further taxes on other imports, including chips, steel, and pharmaceuticals. As the tariffs set the stage for a potentially prolonged trade conflict, Canadian and Mexican leaders stress the need to support local economies in the face of these economic pressures, while reaffirming the importance of cross-border relationships.

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