Canada reacted strongly while Mexico on Tuesday urged calm in the face of US President Donald Trump’s trade threats that threaten to disintegrate their economies.
The US president has accused both neighbors of being lax in stopping migrants and illegal drugs from coming into the United States, and called for the borders to be tightened.
Hours after taking the oath of office on Monday, he indicated that 25 percent punitive tariffs against the United States’ two major trading partners could come as soon as February 1.
He also said he would order troops to be deployed to its border with Mexico to stem the flow of migrants.
“Canada will respond and everything is on the table,” Prime Minister Justin Trudeau said at a news conference, adding that Ottawa’s response would be “strong and swift and measured,” but noting the dollar could be hit by U.S. tariffs on Canadian imports. Will also happen.
A Canadian government source told AFP that Ottawa is considering higher tariffs on US goods including steel products, ceramics such as toilets and sinks, glassware and orange juice in the first phase of tariffs, which could be extended.
Provincial and opposition leaders have also called for a halt to exports of Canadian oil, electricity and critical minerals.
Meanwhile, Mexican President Claudia Sheinbaum played down the threat of tariffs while urging calm in the face of Trump’s announcement of severe new restrictions on migration.
“It’s important to always keep a cool head and refer to the signed agreements, beyond the actual speeches,” he said at his regular morning conference.
– bad neighbors –
Trump defended the tariffs on his first day in office, when he signed a series of executive orders, telling reporters that Canada and Mexico were “allowing huge numbers of people to come in and fentanyl to come in.”
He signed an order directing agencies to study a number of trade issues, including deficits, unfair practices and currency manipulation.
These can pave the way for further responsibilities.
Sheinbaum, who has responded to Trump’s months-long threats with a mix of pragmatism and firmness, said many of the measures are carried over from Trump’s first mandate.
In terms of trade, Canada and Mexico are theoretically protected by the Canada–United States–Mexico Free Trade Agreement (USMCA), which was signed during Trump’s first term and is “the first to be signed by the United States.” It was called “the best and most important trade agreement ever”.
The agreement replaced an earlier continental trade agreement of the 1990s and included new labor provisions specifically aimed at improving worker rights in Mexico.
It is to be reviewed in 2026.
“For now, the trade pact remains in effect,” Sheinbaum said.
Mexico overtakes China to become the United States’ largest trading partner in 2023. That year, the US trade deficit with Mexico increased to US$150 billion.
Trade conflicts between the three signatories have multiplied in recent years, for example over trade in American genetically modified corn, Canadian dairy products and auto parts.
Trudeau warned Tuesday that the trade war will cost the United States, but “Canadians will also pay a price.”
“This is an important moment for Canada and Canadians,” he said.
According to economists, a trade war could push Canada — which sends about 75 percent of its exports to the United States, led by its energy and auto sectors — into recession.
A scenario from Scotiabank shows that any bilateral trade disruption could reduce Canadian GDP by more than five per cent, significantly increase unemployment and increase inflation.
U.S. gross domestic product could decline by 0.9 percent, analyst Jean-François Perrault said in a research note.
According to the Canadian Chamber of Commerce, the tit-for-tat tariffs would cause Canadian GDP to decline by 2.6 per cent, while US GDP would decline by 1.6 per cent.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
