US President Donald Trump launched a trade war against America’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China. Just after last midnight, Trump imposed 25 per cent taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10 per cent on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20 per cent.

Canadian Prime Minister Justin Trudeau speaking at a press conference rejected the US justification for the tariffs. He said the United States launched a trade war against its closest partner and friend Canada. He said his country would impose tariffs on more than $100 billion of American goods over 21 days.

Later, US Commerce Secretary Howard Lutnick said the US would likely meet Canada and Mexico “in the middle,” with an announcement coming as soon as today. He told a TV channel that the tariffs would not be paused, but that President Trump would reach a compromise.

Mexican President Claudia Sheinbaum said Mexico will respond to the new taxes with its retaliatory tariffs.

China also announced retaliatory action yesterday which included 10 per cent to 15 per cent tariffs on certain agriculture imports from the US. This is key because China is the biggest market for these goods, such as American corn, wheat and soybeans.

US markets dropped sharply on Monday after Trump said there was “no room left” for negotiations that could lower the tariffs. Shares were mostly lower yesterday after the tariff took effect.

The Yale University Budget Lab estimates that Trump’s tariffs amount to a tax hike of 1.4 trillion dollars to 1.5 trillion dollars over 10 years and would disproportionately hit the poor.