Trump Trade War 2.0: Tariffs bring more questions and fears
As soon as US President Donald Trump took office, he signed an executive order that would impose additional customs duties on imports from Canada, Mexico and China.
On February 1, the White House announced that an additional 25 percent customs duty would be imposed on imports from Canada and Mexico, and a 10 percent tariff on imports from China. In addition, it was noted that a lower 10 percent tariff would be applied to energy sources imported from Canada.
The statement stated that the US’s trade deficit in goods, over $1 trillion, is the highest in the world. It emphasized that tariffs are a powerful tool to protect national interests, and that Trump prioritizes the safety of the American people by using these tools. Moverover, the executive order emphasized that tariffs could be increased if the countries in question choose to retaliate.
Trump, who made evaluations regarding the customs duties he imposed on Mexico and Canada, answered questions about the customs duties that could be imposed on the European Union (EU) and the UK.
“They don’t take our cars, they don’t take our farm products, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products,” Trump commented about EU.
Canada, China and Mexico respond to Trump’s trade war
Following Trump’s decision, Canadian Prime Minister Justin Trudeau announced that they would impose a 25 percent tariff on imports from the United States worth 155 billion Canadian dollars (approximately $107 billion). Trudeau said that Canada’s response would be extensive, just like the tariffs imposed by the United States, and noted that the application would cover products such as alcoholic beverages, vegetables, perfumes, clothing, shoes, household appliances, furniture, sports equipment, lumber and plastics.
Trudeau addressed the Americans by drawing attention to the fact that this situation would harm Canadians but would also have real consequences for the American people. Trudeau stated that the tariffs would also prevent Americans from accessing affordable supplies of goods that are vital to their safety, and that this would also violate the free trade agreement.
On February 4, the People’s Republic of China also responded to Trump’s ‘trade war’. The Chinese Ministry of Finance announced that an additional 10 percent customs duty will be imposed on products including crude oil, agricultural equipment, high-emission vehicles and pickup trucks from the US, and an additional 15 percent on coal and natural gas imports.
Furthermore, China’s State Administration for Market Regulation announced that it has launched an investigation into Google for violating anti-monopoly regulations. The investigation into the company was announced along with a series of precautionary measures taken by the Beijing administration in response to the additional 10 percent customs duty imposed on China by US President Donald Trump.
On the other hand, another country that is at the center of the discussions and targeted by Trump, Mexico, also took a step. Mexico also stated that it would impose retaliatory tariffs on the US, but avoided mentioning the rate or the product. Mexican President Claudia Sheinbaum said her government sought dialogue rather than confrontation with the US, but that Mexico had been forced to respond in kind.
After these reprisals, US President Trump announced that tariffs on Canada and Mexico would be suspended for 30 days in exchange for increased border security. On February 11, Trump also signed executive orders to impose a 25 percent tariff on steel and aluminum imports. Stating that the tariffs in question apply to all countries, Trump said they will be applied at a rate of 25 percent without exception. On the other hand, Trump, who postponed the tariffs imposed on Mexico and Canada on February 3 for a month, announced to the world in his statement that the customs duties in question would come into effect on March 4. On the same day, Trump made another decision against China. Accordingly, Trump increased the customs duties on China from 10 percent to 20 percent due to their failure to combat fentanyl coming into the country.
In response to Trump’s decision to increase the tariff rate on all Chinese imports to 20 percent, China has imposed additional tariffs on certain agricultural and food products imported from the country and announced sanctions on US companies. A statement from the Chinese Ministry of Commerce stated that an additional 15 percent tariff will be imposed on imports of poultry, barley, corn and cotton from the US, and an additional 10 percent tariff will be imposed on imports of soybeans, pork, beef, fruit, vegetables and dairy products. The statement noted that the new tariffs will come into effect on March 10.
Trump made his second move in April
In a statement he made on April 2, US President Trump stated that the US would impose reciprocal tariffs on other countries, saying, “We will set the minimum basic tariff rate at 10 percent.” Trump also reminded that a 25 percent customs duty on imported automobiles would also come into effect.
In this context, it is planned to impose a 20 percent tariff on the European Union, 34 percent on China, 46 percent on Vietnam, 32 percent on Taiwan, 24 percent on Japan, 26 percent on India, 25 percent on South Korea, 36 percent on Thailand, 31 percent on Switzerland, 32 percent on Indonesia, 24 percent on Malaysia, 49 percent on Cambodia, 30 percent on South Africa, 37 percent on Bangladesh and 17 percent on Israel, which are among the main trade partners of the US.
The US is expected to impose a 10 percent customs duty on some countries including Turkey, the United Kingdom, Brazil, Australia, the United Arab Emirates, New Zealand, Egypt and Saudi Arabia.
Retaliation from China and the European Union to the US
On April 2, Trump announced that the tax rate the US would take from China would be 34 percent. Thus, the total rate, including previous taxes, reached 54 percent. China responded to this step by the US with a tariff of the same rate of 34 percent. In return, Trump gave China one day and announced that if it did not abandon this retaliation, it would impose an additional 50 percent tax on top of the 54 percent. Trump did as he said and increased the customs duties on China to 104 percent.
China did not back down and increased the customs duties on US products from 34 percent to 84 percent. Immediately afterwards, Trump announced on his Truth Social account that he had increased the tariffs he had imposed on China from 104 percent to 125 percent, describing China’s response as “disrespectful to world markets.”
In addition, Trump announced that additional tariffs would be suspended for 90 days for more than 75 countries that contacted him and did not retaliate against the United States.
On April 9, the European Union retaliated against the tariffs imposed by the United States. Accordingly, EU member states announced that they would impose 25 percent tariffs on a wide range of US products, including almonds, orange juice, poultry, soybeans, steel and aluminum, tobacco and yachts. However, the European Union postponed the tariffs it had decided to implement after the US postponed its customs duty decision for 90 days.
Tariffs are expected to burden the American people
According to a study by Yale University, the additional tariffs imposed by the US could cost households an additional $1,200 annually. The Tax Policy Center said the tariffs from Canada and Mexico alone could cost households $930 in 2026.
However, economists warn that the tariffs announced by Trump will negatively impact American businesses and consumers.
Approximately one-third of US imports come from the three countries targeted by Trump. The products that will be affected by the tariffs include fruits, vegetables, meat, alcohol, gasoline, automobiles, electronics, toys, clothing and lumber.
Mexico and Canada supply a significant portion of the food products that come to the US. For example, Mexico is the largest supplier of fruits and vegetables to the US, while Canada is the leading exporter of grain and poultry. According to USDA data, the US imported $46 billion worth of agricultural products from Mexico last year.
Oil is also among the products that will be affected by Trump’s tariffs. The U.S. imported $97 billion worth of oil and gas from Canada last year. The U.S. has become more dependent on Canadian oil since the expansion of Canada’s Trans Mountain pipeline, according to the U.S. Energy Information Administration.
Meanwhile, the U.S. imported $87 billion worth of motor vehicles and $64 billion worth of vehicle components from Mexico last year, according to Commerce Department data.
Canada and Mexico are the largest steel exporters to the U.S., respectively. President Trump imposed a 25 percent tariff on steel imports from most countries worldwide starting in June 2018 during his first term as president. However, Mexico and Canada were exempt from these tariffs under their free trade agreements with the U.S. Canada currently accounts for about a quarter of the steel imported by American businesses, while Mexico accounts for about 12 percent, according to government data provided by the American Iron and Steel Institute.
Prices for electronics and toys are also expected to rise. According to federal trade data, consumer electronics were among the top goods the U.S. imported from China last year. These included cell phones, televisions, and laptops.
According to Footwear Distributors & Retailers of America, 56 percent of shoes sold in the U.S. are made in China. The U.S. also relies on China for toys and sports equipment. The U.S. imports 75 percent of its toys and sports equipment from China.
As a result, the Trump administration’s imposition of additional tariffs on imports from Canada, Mexico, and China could have widespread impacts on the U.S. economy. While the move aims to reduce the trade deficit and protect American manufacturers, it will also result in significant cost increases for consumers and businesses. Studies show that such tariffs could add hundreds of dollars to American households annually. Price increases are inevitable especially in sectors such as food, automotive, electronics, and energy. In addition, retaliation from countries affected by the tariffs will deeply shake the global trade balance.
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