Trump imposes tariffs, and Canada and Mexico respond with their own tariffs.

Trump imposes tariffs, and Canada and Mexico respond with their own tariffs

The United States is imposing tariffs on goods from Canada, Mexico, and China. Starting Tuesday, Canada will face a 25% tariff on most goods and a 10% tariff on energy products. Mexico's goods will also be hit with a 25% tariff, while China will face a 10% tariff.

President Trump says these tariffs are needed to protect Americans, and he plans to keep them in place until issues like fentanyl trafficking and illegal immigration are resolved.

In response, Canada’s Prime Minister Justin Trudeau said they will apply matching tariffs on up to $155 billion of US goods. Mexico’s President Claudia Sheinbaum also announced retaliatory tariffs, and China promised countermeasures, saying the US tariffs break World Trade Organization rules.

President Trump is using a law from 1977, called the International Emergency Economic Powers Act (IEEPA), to impose emergency sanctions and tariffs. This law has never been used before for tariffs, and experts say it may face challenges in court.

Tim Brightbill, a trade lawyer, says the courts have allowed emergency actions in the past, especially for national security, but it’s unclear if tariffs can be included since the law has mainly been used for sanctions.

Companies or trade groups might try to block the tariffs in court, but William Reinsch, another expert, believes it will be difficult since judges usually don’t question what the president considers an emergency.

Moh Siong Sim, a strategist at the Bank of Singapore, says the tariffs and possible retaliations will slow down economic growth in Mexico, Canada, China, and, to a smaller degree, the US. He also thinks the US dollar will be stronger because of the tariff impact.

Mark Malek, chief investment officer at Siebert Financial in the US, believes the uncertainty caused by the tariffs will unsettle the market. He adds that, until now, the market has supported Trump, but this situation could lead to the market challenging his decisions for the first time.