BRUSSELS: The EU warned on Tuesday that US tariffs on Canada and Mexico threaten transatlantic “economic stability” and risk “disrupting global trade,” urging Washington to reverse course.
Stinging US tariffs on Canadian and Mexican goods came into effect as a deadline to avert President Donald Trump’s levies passed without the nations striking a deal.
“These tariffs threaten deeply integrated supply chains, investment flows, and economic stability across the Atlantic,” European Commission spokesman Olof Gill said in a statement.
He noted that Mexico and Canada are the European Union’s economic partners through two separate agreements. In January, the EU announced that it would strengthen its trade relations with Mexico, an upgrade that had been eight years in the making.
“The EU stands firmly against protectionist measures that undermine open and fair trade. We call on the United States to reconsider its approach and work towards a cooperative, rules-based solution that benefits all parties,” he added.
The EU itself faces Trump’s extra levies.
His 25 percent tariffs on US steel and aluminium imports will take effect from March 12, affecting European industries. Brussels has vowed to retaliate with firm and proportionate countermeasures.
Trump has also signed plans for sweeping “reciprocal tariffs” that could hit both allies and adversaries.
Escalating trade war
Trade war fears sent markets falling in Asia and Europe on Tuesday in response to what analysts said were its steepest tariffs on imports since the 1940s.
Trump had announced — and then paused — the blanket 25 percent tariffs on imports from major trading partners Canada and Mexico in February, accusing them of failing to stop illegal immigration and drug trafficking.
In pushing ahead with the duties, Trump cited a lack of progress in tackling the flow of drugs like fentanyl into the United States.
The duties stand to impact over $918 billion worth of US imports from both countries.
The sweeping duties on Canada and Mexico are set to hamper supply chains for key sectors like automobiles and construction materials, risking cost increases to households.
Mexico supplied 63 percent of US vegetable imports and nearly half of US fruit and nut imports in 2023, according to the US Department of Agriculture.
More than 80 percent of US avocados come from Mexico — meaning higher import costs could push up prices for American shoppers.
Truck drivers at the Otay Mesa border crossing in Mexico said they were already feeling the impact of the tariffs as they lined up to cross into the United States on Tuesday morning.
Work was drying up because many companies in the Mexican border city of Tijuana export Chinese goods, said driver Angel Cervantes.
“And since the tariffs are also against China, work is going down for the (transport) companies,” he added.
China vows response
And the United States imports construction materials from Canada, too, meaning tariffs could drive up housing costs.
More than 70 percent of imports of two key materials homebuilders need — softwood lumber and gypsum — come from Canada and Mexico, said National Association of Home Builders chairman Carl Harris.
Trump also inked an order Monday to increase a previously imposed 10 percent tariff on China to 20 percent — piling atop existing levies on various Chinese goods.
Beijing condemned the “unilateral imposition of tariffs by the US” and swiftly retaliated, saying it would impose 10 and 15 percent levies on a range of agricultural imports from the United States.
China’s tariffs will come into effect next week and will impact tens of billions of dollars in imports, from US soybeans to chickens.
Beijing’s foreign ministry vowed to fight a US trade war to the “bitter end.”
“The Chinese people will not be intimidated,” spokesman Lin Jian said.
US tariffs won’t ‘go unanswered’
Canadian Prime Minister Justin Trudeau on Monday pledged to impose retaliatory 25 percent tariffs on Washington, saying in a statement: “Canada will not let this unjustified decision go unanswered.”
Mexican President Claudia Sheinbaum said her country has contingency plans.
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If Trump continues with his tariff plans, KPMG chief economist Diane Swonk warned ahead of them going into effect: “We could easily reach the highest effective tariff rate since 1936 by the beginning of 2026.”
Both consumers and manufacturers stand to bear the costs of additional tariffs, which could diminish demand and trigger layoffs as businesses try to keep costs under control, she told AFP.
Robert Dietz, chief economist at the National Association of Home Builders, told AFP the group expects a possible “combined duty tariff rate of above 50 percent on Canadian lumber” as proposed duties add up.
Even as the United States also plans to expand forestry, Dietz said, prices will likely rise in the short-run.
