Donald Trump's tariff storm is here: What it means for Canada, China and Mexico

US President Donald Trump on Friday ratcheted up his tariff war by announcing that sweeping import duties will be imposed on major trading partners like Canada, Mexico and China from February 1.

The latest round of duties — 25% on imports from Canada and Mexico, and 10% on goods from China — takes effect immediately, the White House has announced, raising fears of a renewed global trade war.

In his trademark style, Trump declared that tariffs are coming and there is nothing these countries can do to forestall them.

On Friday, the White House confirmed the tariffs but offered no clarity on possible exemptions, despite last-minute lobbying efforts from industry leaders and US allies.

“That’ll happen fairly soon,” Trump said in the Oval Office, referring to additional duties on computer chips, pharmaceuticals, steel, aluminum, copper and energy imports.

He also vowed to impose higher tariffs on the European Union, without specifying details.

'Tariffs will make us rich & strong'

Trump has called the tariffs a tool to pressure Canada and Mexico into tightening border controls and curbing drug smuggling, particularly fentanyl.

“The tariffs are going to make us very rich and very strong,” he said.

According to a report in The Wall Street Journal, trade analysts warn that the measures could disrupt supply chains, fuel inflation and trigger retaliatory actions from affected nations.

The report said that Mexico and Canada—who together accounted for 28% of US imports in 2024—have scrambled to negotiate exemptions.

Canadian Prime Minister Justin Trudeau vowed a “forceful but reasonable” response, acknowledging the economic risks. “I won’t sugarcoat it,” he said, signaling potential retaliatory tariffs on US goods.

Canada’s central bank had said that the trade conflict with US can be detrimental to the Canadian economy.

Meanwhile, Trump’s China tariff plan has received less attention but could have a greater financial impact than his first-term trade war, the WSJ report said.

According to estimates, if fully implemented, the latest tariffs would cover over $1.3 trillion in US imports, far surpassing the $360 billion in duties levied on Chinese goods in 2018-19.

BBC reported that factories across China are witnessing plummeting orders and workforce reductions amid uncertainty with US buyers looking elsewhere to sidestep rising costs.

Some firms are relocating production to Vietnam, Cambodia, and other Southeast Asian nations, while others are struggling to keep skilled workers despite declining demand.

'Find another sucker'

It's not just the major trading allies that are on Trump's radar.

The US President has been dangling the sword of tariff threats over the BRICS nations as well, warning that he will impose 100 per cent tariffs against BRICS nations if they attempt to replace the US dollar in international trade.

“They can go find another sucker nation. There is no chance that BRICS will replace the US dollar in international trade, or anywhere else, and any country that tries should say hello to tariffs, and goodbye to America!” Trump threatened on his social media platform Truth Social.

Although Trump has repeatedly criticised BRICS nations against any move to float their own currency, this is his strongest opposition to it so far.

BRICS is an intergovernmental organisation of ten countries - Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates. BRICS, formed in 2009, is the only major international group of which the US is not a part. Over the past few years, a few of its member countries, in particular Russia and China, are seeking to have an alternative to the US dollar or create BRICS currency.

Brace for impact

Meanwhile, US industries, particularly oil, automobiles and technology, are lobbying hard for exemptions, fearing higher costs and market disruptions.

Trump’s advisers have considered carve-outs for oil imports and vehicles that comply with US-Mexico-Canada Agreement (USMCA), but no formal decisions have been announced, the WSJ report said.

White House press secretary Karoline Leavitt dismissed speculation about delays in implementing tariffs, saying Trump “will implement his tariffs tomorrow.”

The assertive tariff moves have already spooked financial markets. Wall Street stocks slipped and the dollar gained on Friday after Trump announced tariffs on Canada, Mexico and China, capping a volatile week for markets.