Sweeping tariffs imposed by President Trump threatened economic upheaval for consumers and businesses in the United States on Tuesday as the country’s biggest trading partners struck back on Tuesday, raising fears of a burgeoning trade war.
Canada and China swiftly condemned the U.S. tariffs and announced retaliatory tariffs against American exports. President Claudia Sheinbaum of Mexico said that if the U.S. tariffs were still in place on Sunday, she, too, would announce countermeasures.
“This is a time to hit back hard and to demonstrate that a fight with Canada will have no winners,” Prime Minister Justin Trudeau of Canada said in a stern and, at times, biting address on Tuesday.
The U.S. tariffs were a stark turnabout from the free-trade evangelism that has marked much of postwar American foreign policy. The measures amounted to 25 percent tariffs on all imports from Canada and Mexico and 10 percent tariff on all imports from China. They came on top of a 10 percent tariff on Chinese goods put into effect one month ago and a variety of older levies, including those that remain from the China trade war during Mr. Trump’s first term.
Amid the tariff dispute, the niceties and flattery that some foreign leaders had employed in the first weeks of the Trump administration seemed to fall away.
Addressing Mr. Trump as “Donald,” Mr. Trudeau said at a news conference in Ottawa: “You’re a very smart guy. But this is a very dumb thing to do.”
The Canadian government said in a statement that it would impose its own 25 percent tariff on $30 billion worth of unspecified American goods and that the tariff would extend to $125 billion in goods in 21 days.
China’s finance ministry announced a 15 percent tariff on imports of chicken, wheat, corn and cotton from the United States, as well as a 10 percent tariff on imports of U.S. sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.
The U.S. tariffs and reprisals initially prompted sharp sell-offs in global financial markets. Asian, European and U.S. stock markets saw sharp declines, with the automotive sector among those hit hardest, though stocks in some other sectors recovered some ground in the afternoon. American companies, including Target and Best Buy, warned of price increases, while industry groups predicted a rise in the cost of gasoline and energy in some parts of the country.
As volatility and uncertainty spread, Mr. Trump and Mr. Trudeau traded barbs.
The American president referred to the Canadian prime minister as “Governor Trudeau,” repeating his assertion that Canada should be subsumed into the United States.
“Perhaps he wants to sink the Canadian economy so that he can annex Canada.” Mr. Trudeau said in response. “That’s never going to happen. We will never be the 51st state.”
The prime minister contrasted Mr. Trump’s imposing tariffs on Canada — the “closest partner and ally” of the United States — with his growing closeness to Russia’s president, Vladimir V. Putin, whom the Canadian leader called “a lying, murderous dictator.”
“What do the American people think about jettisoning America’s friends and allies?” Mr. Trudeau asked.
Mr. Trudeau’s comments spoke to the betrayal expressed by officials in Canada and Mexico who had gone to considerable lengths in recent weeks to convince the president that they were stepping up enforcement at their borders. Mr. Trump had threatened the tariffs after his election in November, saying that the U.S. neighbors to the north and south were not doing enough to halt the flow of drugs and undocumented migrants into the United States.
In Canada, anger against the United States has brought a measure of unity despite deep political divisions.
“President Trump stabbed America’s best friend in the back,” Pierre Poilievre, the leader of Canada’s Conservative Party, told reporters. Mr. Poilievre is Mr. Trudeau’s rival and a favorite to become Canada’s next leader, according to recent polls.
The trade dispute and the acrimony that followed filtered through the political system in Canada.
Doug Ford, the premier of Ontario, said on Tuesday that he had ordered the removal of all U.S.-made liquor from the province’s alcohol distributor and canceled a contract with Elon Musk’s Starlink. He also threatened to impose a 25 percent surcharge on electricity exported from Ontario to Michigan, Minnesota and New York State.
Nova Scotia’s alcohol distributor also said it would remove American products from store shelves.
Some U.S. officials said the tariffs were intended to spur crackdowns on illicit drugs, specifically fentanyl.
Vice President JD Vance said on Tuesday that the administration needed to see “real engagement” because “the Canadians have not been serious about stopping the drug trade.” (Mr. Trudeau has said that less than 1 percent of the fentanyl intercepted at the U.S. border came from Canada, but that the country had still worked to stop its flow.)
And Howard Lutnick, the U.S. commerce secretary, said in an interview on CNBC on Tuesday morning that if Canada and Mexico can prove to the president that they can stop the flow of fentanyl, “then, of course, the president can remove these tariffs.”
Yet, Mr. Trump offered altogether different economic arguments for the tariffs. In social media posts on Tuesday, he said that U.S. banks were prevented from doing business in Canada while Canadian banks “flood the American market.”
In a separate post, he argued that companies could avoid tariffs if they set up shop in the United States. “IF COMPANIES MOVE TO THE UNITED STATES, THERE ARE NOT TARIFFS!!!” he wrote.
In pushing the protectionist measures, Mr. Trump appeared to imagine a much less interconnected world than the one that currently exists. After decades of globalization of supply chains, products and their components often repeatedly cross borders.
Polls are inconclusive about whether Americans favor tariffs, but the president’s arguments that they will help restore jobs lost to free trade have struck a chord among many working-class voters.
One labor group defended the tariffs on Tuesday. The United Automobile Workers union hailed them as a step in the right direction to help workers. In a statement, the union said the North American Free Trade Agreement and its successor, the United States-Mexico-Canada Agreement, had for decades caused losses of blue-collar jobs as companies have moved production to Mexico and other countries.
“Tariffs are a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals,” the union said. “We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class.”
Economists said the tariffs would most likely drag down economic growth both in the United States and in the countries targeted by the tariffs. Canada, Mexico and China have for years been the United States’ largest trading partners.
Economists described numerous other ways that U.S. consumers might be affected.
Analysts at Barclays investment bank said in a report Tuesday that the tariffs “could wipe out effectively all profits” for General Motors, Ford and Stellantis.
Krishna Guha, vice chairman at Evercore ISI, an investment bank, predicted that if the tariffs were maintained, one measure of inflation could increase by roughly half a percentage point by the final quarter of this year. The impact would persist into next year, he said.
In the Northeast, gas prices could rise as much as 40 cents per gallon by mid-March because the region receives a substantial portion of its gasoline and diesel from a refinery in Canada, according to Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks gas prices.
Consumers in the Midwest, where refineries are heavily dependent on Canadian oil, can expect a smaller increase in gasoline and diesel prices, around 5 to 20 cents per gallon, Mr. De Haan said.
In New York and New England, the operators of electric grids were seeking clarification on Tuesday about whether the tariffs would apply to electricity imports from Canada. The two regions receive large amounts of power from hydroelectric dams in Ontario and Quebec. Any tariffs would most likely cause household electricity bills to rise.
As the potential economic consequences of the tariffs unfolded on Tuesday, some of Mr. Trump’s most vocal allies offered only qualified support.
Senator Ted Cruz, Republican of Texas, told reporters on Capitol Hill that he hoped the tariffs would not persist for an extended period.
“Texas does an enormous amount of trade with both Mexico and Canada,“ Mr. Cruz said. “So my hope is these tariffs act as the incentive that President Trump said they were designed to be.”
Reporting was contributed by Matina Stevis-Gridneff, Ian Austen Paulina Villegas, Catie Edmondson, Rebecca Elliott, Neal E. Boudette, Vjosa Isai Jack Ewing, Brad Plumer, Annie Correal, Colby Smith, Robert Jimison, Rob Copeland, Ana Swanson, Alan Rappeport and Christopher Buckley.
