Canada and China swiftly announced retaliatory tariffs against the U.S. on Tuesday, shortly after long-threatened levies by the Trump administration on those countries and Mexico took effect.

President Donald Trump’s new 25% tariffs on imports from Mexico and Canada were imposed at 12:01 a.m. ET, along with a doubling of duties on some Chinese goods to 20%.

Trump’s moves effectively launched new trade conflicts with the United States’ top three trading partners and threatened to upend two-way annual trade worth nearly $2.2 trillion in 2024, according to data from the Office of the U.S. Trade Representative. The tit-for-tat tariffs have rattled global markets.

Trump has accused all three countries of not doing enough to clamp down on drugs like the opioid fentanyl entering the U.S. He also says tariffs will boost U.S. manufacturing and prevent other countries from taking American jobs.

Joint address:Donald Trump to address Congress amid growing pessimism about the economy

Canadian Prime Minister Justin Trudeau said Ottawa would respond with immediate 25% tariffs on $20.7 billion worth of U.S. imports and on another $86.2 billion if Trump’s tariffs were still in place in 21 days. He has said Canada would target American beer, wine, bourbon, home appliances and Florida orange juice.

“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said. He added that they would violate the U.S.-Mexico-Canada free trade agreement signed by Trump in his first term.

China immediately countered the U.S. duties with 10% to 15% tariffs on some U.S. agricultural product imports.

In a news conference in Mexico City, Mexican President Claudia Sheinbaum said that there was “no justification” for Trump’s tariffs and that they were imposed “despite our work against gangs and fentanyl.” Sheinbaum said she plans to announce Mexico’s retaliatory tariffs and other measures against the U.S. on Sunday.

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Tariffs are essentially taxes charged on goods imported from another country. They are typically set at a percentage of the goods’ value and usually paid by the importer. The extra costs are generally passed on to the consumer.

Canada and Mexico have enjoyed a virtually tariff-free trading relationship with the U.S. for three decades.

Trump’s tariffs:What does it mean to be made in America?

Doubling China’s tariffs
The extra 10% duty on Chinese goods adds to a 10% tariff imposed by Trump in February to punish Beijing over the fentanyl epidemic in the U.S. The 20% duty comes on top of tariffs of up to 25% imposed by Trump in his first term.

Some of these products saw U.S. tariffs increase sharply under President Joe Biden, including a doubling of duties on Chinese semiconductors to 50% and a quadrupling of tariffs on Chinese electric vehicles to more than 100%.

The 20% tariff will apply to several major U.S. consumer electronics imports from China that had been untouched by duties, including smartphones, laptops, video game consoles, smartwatches, speakers and Bluetooth devices.

China’s commerce ministry said Tuesday that its new levies, which take effect next Monday, include a 15% tariff on chicken, wheat, corn and cotton, and a 10% tariff on soybeans, pork, beef, fruits, and dairy and fish products.

“The unilateral tariff increase by the U.S. harms the multilateral trade system, increases the burden on American businesses and consumers, and undermines the foundation of China-U.S. economic and trade cooperation,” China’s Customs Tariff Commission said in a statement.

Beijing also filed a lawsuit with the World Trade Organization over the new tariffs, as it did in response to the earlier 10% tariff the Trump administration imposed on Chinese goods.

Recession fears
Some business leaders said the tariffs on Mexican and Canadian products could have much deep repercussions for a highly integrated North American economy that depends on cross-border shipments to build cars and machinery, refine energy and process agricultural goods.

“Today’s reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses and economic disaster,” Canadian Chamber of Commerce CEO Candace Laing said in a statement.

She said the U.S. tariffs will fail to usher in a “golden age” coveted by Trump but instead raise costs for consumers and producers and disrupt supply chains.

“Tariffs are a tax on the American people,” Laing said.

Even before Trump’s tariffs announcement, U.S. data on Monday showed factory gate prices jumped to a nearly three-year high, indicating the new wave of tariffs could soon undercut production. Factory gate prices reflect the price of goods or services before any taxes, shipping or other fees are added.

Trump’s confirmation Tuesday that the tariffs would go ahead sent financial markets sharply lower as global stocks tumbled and safe-haven bonds rallied. The Canadian dollar and Mexican peso fell against the greenback.

Economists at Capital Economics, a financial consultancy, wrote in investor notes Tuesday that if the U.S. tariffs remain in place, they risk plunging Canada and Mexico into recession and slowing global growth more generally.

Where to expect rising prices:Trump’s tariffs on Canada, Mexico go into effect on Tuesday

Tariff actions at a blistering pace
Trump has maintained a blistering pace of tariff actions since taking office in January, including fully restoring 25% tariffs on steel and aluminum imports that take effect March 12, revoking earlier exemptions.

Trump’s “America First” agenda, aimed at redrawing trade relationships in favor of the U.S., was expected to be a centerpiece of his address Tuesday night to a joint session of Congress.

Look right, look left:Trump will survey a landscape transformed in speech to Congress

On Saturday, Trump opened a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5% U.S. tariffs on softwood lumber, would be hit particularly hard.

A week earlier, Trump revived an inquiry into countries that levy digital services taxes, proposed fees of up to $1.5 million on every Chinese-built ship entering a U.S. port, and launched a tariff investigation into copper imports.

These add to his plans for higher “reciprocal tariffs” to match the levies of other countries and offset their other trade barriers, a move that could hit the European Union economic bloc.

A commercial truck drives toward the Ambassador Bridge to Windsor, Canada from Detroit, Michigan, on March 3, 2025.
Robert Habeck, Germany’s economy minister, said in a statement that the 27 nations that make up the EU would not be pushed around by Trump if he imposes tariffs on their products.

“We will react with unity and self-confidence,” he said.

And Trudeau, Canada’s leader, said it was the wrong strategy.

“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs,” he said.

In Beijing, Foreign Ministry spokesman Lin Jian said that if the U.S. “persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end.”

Contributing: Reuters