- China retaliated with tariffs on American goods after Donald Trump doubled levies on Chinese goods.
- Canada also announced 25% retaliatory tariffs on US goods.
- Canada’s Trudeau said that Americans will pay more for gas and groceries as a result.
Canada and China swiftly retaliated against new tariffs from the Trump administration on Tuesday.
After President Donald Trump doubled tariffs on Chinese goods from 10% to 20%, Beijing announced additional tariffs of 10% to 15% on some US imports starting March 10.
Canada also was prepared for a quick response; the country’s prime minister, Justin Trudeau, released a statement on March 3 saying that if Trump’s tariffs go into effect, Canada will place a 25% tariff on $155 billion of American goods until Trump’s tariffs are withdrawn.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs,” Trudeau said. “Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”
The retaliatory tariffs mark a new trade war under the Trump administration; Trump has vowed that his tariffs will remain in place until the countries he is targeting crack down on their drug and border policy, specifically surrounding the flow of fentanyl into the US.
“While President Trump gave both Canada and Mexico ample opportunity to curb the dangerous cartel activity and influx of lethal drugs flowing into our country, they have failed to adequately address the situation,” the White House’s fact sheet said.
Mexico’s President, Claudia Sheinbaum, said on Tuesday there was no justification for the US move and that would announce “tariff and non-tariff measures” on Sunday. Mexico was also hit with a 25% tariff from Trump.
The impact of Canada and China’s retaliatory tariffs
China’s retaliatory tariffs include 10% tariffs on US soybeans, pork, and beef imports and 15% tariffs on chicken and cotton imports, according to the Commerce Ministry.
Beijing also targeted American farm imports into China when US President Donald Trump started the trade war in his first term.
Trudeau’s statement did not outline specific goods Canada’s tariffs are targeting. However, Trudeau said in early February, following Trump’s initial tariff announcement, that Canada’s tariffs will impact a range of goods shipped from the US to Canada, including fruit, clothing, shows, and household appliances.
Beijing’s speedy response on Tuesday — reminiscent of Beijing’s swift response on February 4 against the US’s first tranche of tariffs — is an indication that Xi Jinping’s administration was prepared for the moves.
Markets in Asia were broadly lower early on Tuesday because of worries over the impact of the trade war. But losses were limited as investors were already prepared, analysts said.
China’s measures also appeared contained, Gary Ng, a senior economist at Natixis, told Business Insider. He said Beijing stuck to its “playbook of retaliation,” similar to the moves it used on February 4. Last month, the country announced tariffs on some US goods and imposed export controls and market access restrictions on select companies.
Some US companies are already preparing for price increases in response to the latest tariffs. Target CEO Brian Cornell told CNBC on Tuesday that the tariffs could lead the company to raise prices on fruits and vegetables.
“Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” Cornell said, adding: “If there’s a 25% tariff, those prices will go up.”
DeepSeek confidence is buoying China
China’s markets have recently been supported by renewed interest in its tech stocks following DeepSeek’s meteoric rise.
At a press briefing on Monday, Scott Kennedy, a China specialist at the Center for Strategic and International Studies, said China felt it was in a “much better position” than during Trump’s first term in office. Because of significant tech advances, Beijing is not “desperate” for a Trump deal, he said.
“If they’re going to reach a deal, they want it to benefit China and not just be a one-way list of concessions from Beijing to Washington,” Kennedy said.
Trump is doubling down on tariffs just as Beijing holds its annual political meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference known as “Two Sessions.”
Investors are watching for signs that China will step up stimulus measures amid heightened trade tensions, a prolonged economic downturn at home, and weak domestic consumption.
Chinese Premier Li Qiang is expected on Wednesday to deliver the government work report that’s set to detail top policy priorities and reveal China’s 2025 GDP growth target.
