When US President Donald Trump first announced tariffs on Mexico, Canada, and China during his first term, the global community closely observed the unfolding situation. The President’s rationale was largely centred on combatting the trade of the synthetic opioid fentanyl, though many critics saw this as a legal pretext for a broader, more aggressive trade stance that would typically require congressional approval. The initial reactions from the countries affected varied, with some retaliating swiftly, while others adopted a more cautious approach. The European Union (EU) and other global powers also monitored the situation closely, fearing the long-term economic consequences of Trump’s policies.
Trade war ignites
Trump’s decision to impose tariffs signalled the beginning of a contentious trade war that would reverberate globally. The US introduced a 25% tariff on goods from Mexico and Canada and a 10% tariff on imports from China. While Trump argued these measures were necessary to curb the fentanyl trade and protect US industries, his actions were seen by many as an overt attempt to bolster protectionist policies. This move set the stage for a rise in trade tensions, particularly with countries that had long been key US trading partners.
Public comments made by Trump about the UK and the EU further fuelled uncertainty. The President, while engaging in dialogues with UK Prime Minister Keir Starmer, focused much of his rhetoric on criticising the EU for what he perceived as an unfair trade relationship. This ongoing confrontation over trade policies quickly became a hallmark of Trump’s administration.
Canada’s defiant response
Canada wasted little time in expressing its discontent. Mark Carney, who was seen as a frontrunner for the country’s next prime minister, responded forcefully, vowing retaliation in the form of dollar-for-dollar tariffs. Carney sharply ridiculed Trump’s justifications for the tariffs, affirming Canada’s resolve not to submit to what he described as “bullying.” Prime Minister Justin Trudeau echoed this sentiment, promising to defend Canadian interests against US actions.
Canada’s response underscored its determination to challenge the US’s protectionist agenda, sending a strong message that it would not tolerate unfair trade practices.
Mexico’s call for dialogue
In contrast to Canada’s more confrontational stance, Mexico’s reaction was more measured. President Claudia Sheinbaum emphasised the importance of dialogue, advocating for discussions rather than punitive measures. She noted that “problems are not addressed by imposing tariffs, but with talks and dialogue,” although Mexico did announce retaliatory tariffs on US goods. Despite this, Sheinbaum’s approach remained diplomatic, reflecting Mexico’s desire to avoid escalating tensions unnecessarily while still defending its interests.
Mexico also sought to work closely with Canada in confronting the tariffs, reflecting a cooperative stance between the two nations against the US’s actions.
China’s legal countermeasures and retaliation
China, one of the hardest-hit by Trump’s tariff policies, responded assertively. The Chinese government announced its intention to take the matter to the World Trade Organization (WTO), accusing Trump’s tariffs of violating global trade regulations. Though largely symbolic, China’s move highlighted its commitment to challenging the legitimacy of US tariffs on the international stage.
Further retaliation from China was expected, though the exact measures remained unclear at the time. Chinese officials warned that the trade war would have no winners, cautioning that the US tariffs would ultimately harm global economic stability.
India’s shift toward market liberalisation
While the US took a protectionist route, India took a different approach. India’s Finance Secretary, Tuhin Kanta Pandey, revealed that the country was moving away from protectionist policies and towards a more liberalised trade environment. In early 2025, India announced tariff reductions on a wide array of goods, including electronics and textiles, signalling a commitment to creating a stable, investor-friendly environment.
India’s stance was viewed as a deliberate divergence from the US’s protectionist rhetoric, with the country focusing on market liberalisation and global economic cooperation rather than insulating itself from global trade dynamics.
Europe and the UK’s cautious stance
The European Union, while avoiding direct retaliation, closely monitored developments. Leaders were wary of the long-term consequences of Trump’s policies, particularly his focus on the EU as an “unequal” trade partner. While the EU was cautious in its responses, speculation suggested that it would soon take measures to safeguard its interests, particularly in light of the US’s demands for increased purchases of liquefied natural gas and military equipment.
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UK Prime Minister Keir Starmer maintained a cordial relationship with Trump, but the US President made it clear that the UK’s trade relationship with the US was “out of line.” Despite his softening comments, Trump remained noncommittal on imposing tariffs on the UK, but confirmed that tariffs on the EU were “inevitable.”
Economic fallout
The economic fallout of these tariffs raised significant concerns, particularly for Canada and Mexico. With the US serving as a major export partner, both nations were vulnerable to the impacts of a trade war. Economic experts warned that these tariffs could plunge the Canadian and Mexican economies into recession, destabilising the broader North American region.
China’s retaliatory measures, combined with India’s progressive liberalisation stance, suggested that the trade war would result in a prolonged period of global economic uncertainty. While some countries acted swiftly to protect their interests, others, like the EU, took a more cautious approach, closely observing the situation as it unfolded.
The ripple effects of these tariffs will continue to affect global trade relations and economic strategies for years to come, with countries adopting various methods to shield themselves from the economic turbulence caused by the US’s aggressive trade policies.
