WORLD
Trump triggers trade war, slaps 25% duty on Canada, Mexico, 10% on China
- IBJ Bureau
- Feb 03, 2025
Asian stock markets slumped on Monday and European and US equity futures pointed sharply lower after US President Donald Trump’s tariffs on Canada, Mexico and China triggered fears of a broad trade war and a hit to global growth.
The US dollar shot to a record peak against the Chinese yuan in offshore trading, its highest against Canada’s currency since 2003 and the strongest against the Mexican peso since 2022.
Mr Trump slapped Canada and Mexico with duties of 25 per cent and China with a 10 per cent levy at the weekend, calling them necessary to combat the flow of migrants and fentanyl into the US.
Canada and Mexico immediately vowed retaliatory measures, and China said it would challenge Mr Trump’s levies at the World Trade Organization (WTO).
The tariffs, outlined in three executive orders, are due to take effect at 12:01 am ET (0501 GMT) on Tuesday.
Mr Trump’s move was the first strike in what could usher in a destructive global trade war and drive a surge in US inflation that would “come even faster and be larger than we initially expected”, said Paul Ashworth of Capital Economics.
A model gauging the economic impact of Mr Trump’s tariff plan from EY Chief Economist Greg Daco suggests that it will reduce US economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in “stagflation” at home.
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