A trade war between global economic giants may be brewing amid the uncertainty surrounding Trump’s new tariffs. Just hours before sweeping tariffs were set to take effect, President Donald Trump announced a 30-day pause on new trade duties targeting Mexico and Canada, CNN reported.
The decision followed direct talks with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, who reportedly pledged enhanced border security measures.
While North American businesses sighed in relief, the reprieve does little to calm escalating tensions with China, which has retaliated with tariffs and trade restrictions of its own.
North American Tariffs on Hold
Trump’s initial proposal included a 25% tariff on all Mexican imports and most Canadian goods, with a 10% carve-out for energy products. These tariffs, announced over the weekend, have sparked market volatility and pushback from both trading partners.
— Donald J. Trump (@realDonaldTrump) February 1, 2025
Canada swiftly responded with its own retaliatory measures, while China vowed countermeasures in response to separate US tariffs targeting Chinese goods. Trump framed the pause as an opportunity for negotiations, stating that discussions would be led by senior US officials, including Secretary of State Marco Rubio and Treasury Secretary Scott Bessent.
While Mexico and Canada secured a temporary reprieve, China found itself at the center of an escalating trade battle. Beijing swiftly imposed tariffs on a range of US imports, including coal, liquefied natural gas, and agricultural machinery, according to a separate report by the CNN.
Additionally, China introduced export restrictions on key industrial metals like tungsten and tellurium, which are critical for defense and technology industries, Reuters reported.
The Chinese government also launched an anti-monopoly investigation into Google and signaled potential sanctions against US companies such as PVH Corp and Illumina.
⚠️ JUST IN:*CHINA SLAPS TARIFFS OF UP TO 15% ON SELECT U.S. IMPORTS STARTING FEB. 10🇨🇳🇺🇸 pic.twitter.com/inrzXMOhWZ
— Investing.com (@Investingcom) February 4, 2025
Market Reaction and Economic Impact
The financial markets responded sharply to the tariff uncertainty. The Dow Jones Industrial Average reportedly tumbled nearly 600 points at the opening bell before partially recovering on news of the North American tariff pause.
Crude oil prices also dipped following China’s retaliatory measures, while the US dollar strengthened against the Chinese yuan and Mexican peso.
There are fears that if the North American tariffs are eventually enforced, they could push Canada and Mexico toward recession while driving up prices for US consumers on cars, lumber, and gasoline.
The potential for further tariffs against China and Europe adds to the uncertainty, with investors closely watching for any signs of diplomatic breakthroughs.
This article was written by Jared Kirui at www.financemagnates.com.TrendingRead More
You might also be interested in reading China central bank shuts down software maker over cryptocurrency trading.