President Donald Trump’s new tariffs on imports from Canada, Mexico, and China have sparked fears of a global trade war. The U.S. stock markets plummeted on Tuesday morning as these countries took swift retaliatory measures. Trump imposed a 25% levy on most Chinese goods, with a separate 10% tariff on Canadian energy exports.
The existing 10% tariffs on Chinese goods were also increased to 20%. The Dow fell 1.55%, or about 670 points on Tuesday after already falling nearly 1.5% on Monday. The S&P lost 1.2% while the Nasdaq lost 0.35%.
Canada, Mexico, and China are the country’s three largest trading partners. The escalating trade war is likely to result in consumers paying higher prices for a wide range of products, including fruits and vegetables, flat-screen TVs, and auto parts.
Trade war impacts stocks, consumer prices
Canadian Prime Minister Justin Trudeau speculated that the U.S. tariffs were imposed to hurt Canada’s economy. “That’s never going to happen,” he firmly stated. Canada has retaliated by imposing its own tariffs on U.S. goods.
Mexican President Claudia Sheinbaum announced that Mexico will respond to the 25% tariffs imposed by the United States with its own retaliatory tariffs on U.S. goods. Beijing imposed tariffs of up to 15% on a wide array of U.S. farm exports and expanded the number of U.S. companies subject to export controls and other restrictions. Companies big and small across the U.S. are bracing for higher costs on goods they import from these countries and may have little recourse but to hike prices for consumers.
Trucks were seen lining up to cross the border into the United States as tariffs against Mexico went into effect. Canadian energy products and several other affected U.S. goods were notable among the embargoed items. The escalating trade war reflects deepening tensions between the U.S. and its key trading partners, leaving businesses and consumers on edge about the future economic landscape.
