Trump tariffs: China, Canada and Mexico retaliate in kind

Hours after the controversial tariffs on Canada and Mexico came into effect, US Commerce Secretary Howard Lutnick told US media President Donald Trump could meet the countries "in the middle" by Wednesday.

"I think he's going to figure [something] out, you do more and I'll meet you in the middle in some way," Lutnick told Fox Business News, adding that this could be announced on Wednesday. 

Lutnick said that the tariffs would not be paused but rather that Trump would reach a compromise.

"Somewhere in the middle will likely be the outcome, the president moving with the Canadians and Mexicans, but not all the way."

Premiers of several Canadian provinces announced they were going to remove US alcohol products from their shelves as a response to the Trump administration's tariffs on Canadian imports.

Ontario Premier Doug Ford said the move to remove US alcohol would see "an enormous hit to American producers."

Nova Scotia Premier Tim Houston said his province is also removing all US alcohol from their shelves.

Quebec's government said it was ordering the local alcohol distributor "to stop supplying American alcoholic beverages" to stores, bars and restaurants.   

US President Donald Trump threatened to place even higher tariffs on Canadian goods after Canadian Prime Minister Justin Trudeau announced retaliatory measures.

"Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the US, our Reciprocal Tariff will immediately increase by a like amount!" Trump wrote in a post on Truth Social.

Trump has taken to calling Trudeau "governor" to insinuate that Canada should be a US state. In truth, Trudeau is the prime minister of a sovereign country.

Trump is set to deliver a joint address to Congress later today —which you can watch here — where he will likely explain his tariff plans, among other things. 

A trade group representing major international car and vehicle manufacturers which build and sell products in the United States has warned that the 25% tariffs on Canadian and Mexican imports imposed by US President Trump could lead to significant price hikes.

"All automakers will be impacted by these tariffs on Canada and Mexico," said John Bozzella, chief executive and president of the Washington-based Alliance for Automotive Innovation (AAI), according to the Reuters news agency.

"Most anticipate the price of some vehicle models will increase by as much as 25% and the negative impact on vehicle price and vehicle availability will be felt almost immediately."

Canadian Prime Minister Trudeau said he wasn't sure what US President Trump is aiming to achieve by slapping tariffs on imports from friendly countries, but suggested that it could be linked to his remarks about making Canada a 51st US state.

Dismissing Trump's public justification of wanting to clamp down on the illegal fentanyl trade as "bogus" and "completely false," Trudeau said there could only be one other explanation for his hostility:

"What he wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us," he said. "That's never going to happen. We will never be the 51st state."

Canadian Prime Minister Justin Trudeau has reacted to US President Donald Trump's imposition of tariffs on Canadian imports by calling the move "a very dumb thing to do."

"Today, the United States has launched a trade war against Canada, against its closest partner and ally, against its closest friend," he told reporters, promising that Ottawa would not back down.

"At the same, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying murderous dictator. Make that make sense," he added.

In response, Trudeau announced that Canada would be imposing 25% tariffs on US imports worth 30 billion Canadian dollars with immediate effect, with 25% tariffs on a further C$125bn worth of imports in 21 days' time.

"There is absolutely no justification or need whatsoever for these tariffs today," he said. "Canadians are reasonable, we are polite, but we will not back down from a fight."

In response to Trump's tariffs, Canada's province of Ontario will place a 25% export tax on electricity it sends to 1.5 million homes in Minnesota, Michigan and New York, Ontario Premier Doug Ford announced.

Ford warned that the exports would be shut down entirely if Trump goes ahead with even more tariffs on April 2 when reciprocal tariffs on all US trading partners are supposed to come into effect.

Ford added he would order his energy minister to redirect energy from an Ontario nuclear reactor to local manufacturers instead.

US Commerce Secretary Howard Lutnick said prices could rise as a result of tariffs imposed on goods from China, Canada and Mexico.

"There may well be short-term price movements, but in the long-term, it's going to be completely different," Lutnick told US news channel CNBC in an interview on Tuesday.

Imports from Canada and Mexico will now be taxed at 25%, while the 10% tariff that Trump put on Chinese goods in February was doubled to 20%.

He pointed out that the tariffs could be removed if the countries could show progress on restricting fentanyl flows into the US.

"This is not a trade war, it’s a drug war," Lutnick said.

European stock markets sank on Tuesday amid growing concerns that the EU will be next in line for US President Donald Trump's tariff plan.

After the US levies against China, Mexico and Canada went into effect earlier on Tuesday, Paris dropped 1.9% while Frankfurt was down 2.9% and London fell 0.9%.

In late February, Trump threatened to hit European cars and other goods with 25% tariffs. He accused Europe of taking advantage of the US.

Meanwhile, Wall Street stocks are falling again following Trump's decision to go ahead with tariffs.

The S&P 500 declined 0.7% Tuesday morning, the Nasdaq slipped 0.6% and the Dow slipped 423 points, or 1%.

Mexican President Claudia Sheinbaum said there was no justification for US President Donald Trump to impose 25% tariffs on imports from Mexico.

"There is no motive, reason or justification that supports this decision that will affect our peoples and nations," said the president at a press conference.

Sheinbaum said her government would respond with tariff and non-tariff measures which will be announced on Sunday.

Canada and Mexico see Trump's tariffs as a violation trade laws.

The two US neighbors are not only WTO members, but also partners in an existing free trade agreement with the US, the so-called USMCA. The trade pact came about after pressure from the first Trump administration and was ratified by the US Congress.

The tariffs could be challenged in US courts. Although a 1977 law gives the US president the right to intervene in international trade, even when existing agreements are in place, with the only condition being that the president declares a national emergency.

Donald Trump did exactly this shortly after taking office, using his executive orders to declare a national emergency due to the massive influx of migrants via the Mexican border and a rise in illegal drugs like fentanyl from Canada.

Read DW's full report on how Trump's trade policy is violating existing trade agreements.

The executive body of the EU, the European Commission, said on Tuesday that it "deeply regrets" the imposition of tariffs by the US Trump administration on imports from Mexico and Canada.

"This move risks disrupting global trade, harming key economic partners, and creating unnecessary uncertainty at a time when international cooperation is more crucial than ever," the Commission said in a statetment.

The Commission's remarks were echoed by EU trade spokesman Olof Gill.

"These tariffs threaten deeply integrated supply chains, investment flows and economic stability across the Atlantic," Gil saidl. "We call on the United States to reconsider its approach and work toward a cooperative, rules-based solution that benefits all parties."
Germany's economy minister, Robert Habeck, meanwhile said that the EU would "react with unity and self-confidence" if Trump goes ahead with his declared intention of imposing similar tariffs on the bloc.

 "Germany supports the EU Commission's approach of working with the US government to find a negotiated solution," Habeck, a Green politician who is also Germany's vice chancellor, said in a statememt on Tuesday.

"But the EU will not be pushed around. If President Trump imposes the announced tariffs on EU products, we will react with unity and self-confidence," the statement said.

European stock markets have reacted negatively amid fears that US President Donald Trump could impose similar tariffs on Europe as he  now has on Canada, Mexico and China.

London's FTSE 100 index slipped 0.6%. In the eurozone, the Paris CAC 40 index dropped 1.0% and Frankfurt's DAX slid 1.4%.

Trump falsely claimed last week that the European Union had been created only to "screw" the United States. He said he would soon be announcing tariffs of 25% on EU products.

The US president has ordered his officials to develop reciprocal tariffs on imports to the US, keeping to an "eye for an eye" campaign promise on matters of world trade.

Trump has a longstanding belief that the US is being treated unfairly in global trade. He argues that many countries impose higher tariffs on US goods than the US does on theirs, creating an imbalance.

For example, India levies tariffs that are typically between 5 and 20% higher than the US on 87% of imported goods, according to data from Global Trade Alert, an organization which assesses commerce policies.

Trump has said he wants to match the levy on US imports that other countries apply to US products.

As well as forcing major powers like China and the European Union to lower their duties, the president believes reciprocal tariffs will boost his "America First" economic policy by narrowing the country's trade deficit while improving the competitiveness of US manufacturers.

However, economists have pointed out that the US benefits from having large trade imbalances with the rest of the world, as the dollar — the global reserve currency — is used in most trade, which offers major tailwinds to the US economy.

Countries use those dollars earned in trade to invest back into the US, often in government bonds, stocks and real estate. This keeps US interest rates lower, and allows US businesses and consumers to borrow and spend more.

Read DW's full explainer here.

France's Economy Minister Eric Lombard said on Tuesday that the European Union should take a tough line in its negotiations with the US over customs tariffs but that it still had to reach a deal that prevented damage to the bloc's economies. 

"We have negotiators who are playing hardball, we will play hardball but ... we need to reach a balanced deal to protect our economies," Lombard told France Info radio.

"We are in tough negotiations with a US government that we can see is very tough in its international relations," he said.

Lombard said he had been told by US Treasury Secretary Scott Bessent at a Thursday meeting that they could "bargain down" in talks.

"We need to look at this with a cool head," Lombard said, adding: "The European Union is the United States' first market."