Trump’s tariffs spark retaliation from Canada, Mexico, and China, causing market fluctuations and concerns over rising consumer prices.
In Short
President Trump’s 25% tariffs on goods from Mexico and Canada prompted Canada to retaliate with similar tariffs, while Mexico plans its own measures. This trade dispute, alongside increased tariffs on China, caused declines in U.S. stocks and raised concerns about higher prices for American consumers.
President Trump’s 25% tariffs on goods from Mexico and Canada took effect on Tuesday.
In response, Canada plans to impose 25% tariffs on around $100 billion of U.S. imports, with Prime Minister Justin Trudeau accusing Trump of acting in “bad faith.” Mexico’s president has indicated that retaliation measures will be announced on Sunday.
Additionally, the U.S. has introduced a further 10% tariff on Chinese imports, compounding previous tariffs. China has responded by announcing retaliatory tariffs on U.S. agricultural products and has filed a lawsuit with the World Trade Organization.
Sharp declines
Following these developments, U.S. stocks showed some recovery after initial sharp declines, although the Dow industrials were still down Tuesday afternoon. The Nasdaq Composite turned slightly positive, and gold prices increased.
Currency movements for the Canadian dollar and Mexican peso were modest, as some traders believe the tariffs may not last long.
Economists warn that the cost of these tariffs will likely be passed on to American consumers, leading to higher prices at grocery stores and car dealerships.
As a result of the tariffs, U.S. stocks fell, especially among automakers like General Motors and Tesla. The Dow industrials and S&P 500 experienced declines, while the Nasdaq Composite, after nearly entering correction territory, managed to pare some losses.
Wall Street’s volatility index, known as the VIX, rose further, reaching its highest level of the year.
