DON THE ATTACK
Boost industry, cut tax & turn screw on foreign powers: What Trump wants with World Trade War…& what it means for prices
Markets have been tumbling in reaction to Trump's tariffs
PRESIDENT Donald Trump sparked a World Trade War after slapping steep tariffs on imports from Canada and Mexico - and threatens the EU will be next.
The newly-inaugurated president believes the taxes are "worth the price", adding that the US was no longer going to be the "stupid country" that was subsidizing others.
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During his successful election campaign, Trump promised to put import taxes back at the core of US economic policy if he were regain the keys to the White House.
Now the president has imposed high import tariffs of 25 per cent from Canada and Mexico and 10 per cent from China - set to take effect early on Tuesday.
Energy, like oil and natural gas, imported from Canada was also only hit with a 10 per cent tariff.
But prices of fruit like avocados and tomatoes and manufactured products like cars or computers are set to be more expensive for Americans.
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A trade showdown could cost families $1,000 (USD) and slow down general growth if prices spike - but the Republican appears more than ready to risk it.
TRUMP'S TARIFF PLANS
As it stands currently for imported industrial goods, which make up a whopping 94 per cent of US merchandise imports by value, the US has a trade-weighted average tariff rate of 2 per cent.
Trump's treasury secretary Scott Bessent made it clear as to what the Republican leader wants out of the tariffs during his confirmation hearing in January.
Bessent told senators that the world should expect Trump to use tariffs in three different ways - to aid the unfair trade practices, raise revenue for the federal budget, and to turn the screw on foreign powers in place of sanctions.
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Just as Trump said in a post on Truth Social, he looks to end trade imbalances with other countries - otherwise known as the "RIPOFF OF AMERICA" - through the tariffs.
The Republican leader has hinted at mixing tariffs and incentives like expedited permitting approval to encourage companies to build their facilities in the US.
The Republican enthusiastically told in October: "We’re going to bring the companies back.
"We’re going to lower taxes still further for companies that are going to make their product in the USA. We’re going to protect those companies with strong tariffs."
Income from tariffs could also aid in paying for the tax cuts Trump has promised American citizens.
He looks to extend reductions in income taxes that were approved back in 2019 during his first presidency - many of which are set to expire at the end of 2025.
Swelling these tax breaks has been proposed, for example through exempting tips and social security earnings from taxation.
Trump also looks to dramatically cut the corporate tax rate from 21 per cent to a mere 15 per cent.
While doing this alone could lead to a loss in government revenue of around $4.6 trillion over a decade, with Trump's tariff hikes, $2.5 to $3 trillion could be brought in over the same time period, Bessent claims.
One of Trump's trade advisers Peter Navarro said that at the end of January, the tariff effort can replace the revenue of tax cuts.
What are Trump’s new tariffs and how have countries hit back?
By Annabel Bate, Foreign News Reporter
DONALD Trump has started a trade war after he slapped steep tariffs on imports from Canada and Mexico - with more to follow.
Canada
Trump announced he is imposing 25 per cent tariffs on imports from Canada on most goods, and 10 per cent on Canadian oil.
Canada's Prime Minister Justin Trudeau said in a news conference on Sunday that, in response, he will impose 25 per cent retaliatory tariffs on US goods worth an eye-watering $107 billion.
This could range from beer to household appliances.
Trudeau delivered the announcement in a somber tone, channelling the betrayal that many Canadians are feeling.
He reminded Americans that Canadian troops fought alongside them in Afghanistan and helped respond to myriad crises from wildfires in California to Hurricane Katrina.
Trudeau said: "We were always there standing with you, grieving with you, the American people.
"It is going to have real consequences for people, for workers on both sides of our border. We dont want to be here.
"We didn't ask for this, but we will not back down in standing up both for Canadians and for the incredible successful relationship between Canada and the United States."
Mexico
Trump has slapped 25 per cent tariffs on all imports from Mexico.
Mexico has announced condemnatory retaliatory tariffs on the US.
Mexican President Claudia Sheinbaum ordered the "Plan B" to go into effect which "includes tariff and non-tariff measures" in a X post.
She said that her government sought dialogue over confrontation with the US - but now Mexico has had to respond with similar force.
While no specifics have been provided on Plan B, Mexico has previously suggested it would impose levies ranging from 5 to a whopping 20 per cent.
These would be put on pork, cheese, fresh produce, steel and aluminium.
Mexico also supplies 90 per cent of avocado bought and enjoyed by Americans.
China
Trump has slapped 10 per cent tariffs as he believes China is "sending fentanyl to Mexico and Canada".
China says the threatened tariffs are a "serious violation"; of the World Trade Organization rules.
The country is therefore filing a lawsuit with the WTO against the US for "wrongful practice".
The EU and UK
It remains unclear what tariffs on EU goods or the UK.
A European Commission spokesperson said the EU will "respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU goods".
He told "Tariffs can easily pay for that.
"President Trump wants to move from the world of income taxes and countless IRS agents to the world where tariffs, like in the age of [President William] McKinley, will pay for a lot of government that we need to pay for and lower our taxes."
Trump also looks to impose tariffs as sanctions often drive other countries away from the dollar - and tariffs could be a strategic way to influence and pressure in negotiations.
In fact Trump's migrant standoff with Colombia was a signal to all world leaders - and proved nothing is off the table, an expert said.
Colombia caved and accepted the return of its own illegal immigrants after Trump threatened to hit the South American nation with tariffs and sanctions.
Trump had planned to slap a 25 per cent tariff on Colombian imports - and revoke the visas of government officials.
The president's tariff demands on Canada, Mexico and China look to stop the manufacture and import of the deadly drug fentanyl and address the "threat to the safety and security of Americans".
GOODS TO BE HIT FIRST
Auto companies have built supply chains that cross the borders of the US, Mexico and Canada.
Over one in five of the cars and light trucks sold in the US were built in Canada or Mexico, S&P Global Mobility reports.
In 2023, the US imported $69 billion worth of cars and light trucks from Mexico, and $37 billion from Canada.
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Meanwhile another whopping $78 billion in auto parts came from Mexico, and similarly $20 billion from Canada.
Trade analyst Scott Lincicome said: "You have engines and car seats and other things that cross the border multiple times before going into a finished vehicle.
"You have American parts going to Mexico to be put into vehicles that are then shipped back to the United States.
"You throw 25% tariffs into all that, and it’s just a grenade."
China also serves as a major supplier of auto parts to the US.
The average US car prices could therefore rise by around a whopping $3,000, TD Economics claims.
And Canada is America's biggest foreign supplier of crude oil, meaning the tariffs could result in higher gas prices, "particularly in the Midwest," according to Lincicome.
The tariffs have the potential to push up US gasoline prices overall by 30 cents to 70 cents a gallon.
Consumer goods that Americans depend on could be impacted due to the tariffs imposed on China.
Phones and computers along with other key electronic devices were in the top imports from China last year, according to Commerce Department Data.
And the US imported over a shocking $32 billion in "toys, games and sporting goods" from China last year too.
Americans also import billions of dollars worth of clothing in a year from China.
Tariffs could also raise the price of alcohol - including tequila and Canadian whisky.
In 2023, the US imported $4.6 billion worth of tequila and $108 million worth of mezcal from Mexico, according to the Distilled Spirits Council of the United States.
The US also imported $537 million worth of Canadian spirits, including $202.5 million worth of whisky.
Trump REFUSES to rule out UK tariffs as Mexico & Canada hit back with retaliatory sanctions
MEXICO AND CANADA'S REVENGE SANCTIONS
Mexico and Canada announced condemnatory retaliatory tariffs on the US.
Mexican President Claudia Sheinbaum ordered the mysterious "Plan B" to go into effect which "includes tariff and non-tariff measures" in a lengthy X post.
She said that her government sought dialogue over confrontation with the US - but now Mexico has had to respond with similar force.
While no specifics have been provided on Plan B, Mexico has previously suggested it would impose levies ranging from 5 to a whopping 20 per cent.
These would be put on pork, cheese, fresh produce, steel and aluminium.
Mexico also supplies 90 per cent of avocado bought and enjoyed by Americans - meaning the price of the beloved fruit could increase.
Prior to the response, President Sheinbaum slammed Trump for suggesting "the Mexican government has alliances with criminal organizations".
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She said Trump should instead "fight the sale of drugs on the streets of their major cities, which they don't do".
It comes as Canada's Prime Minister Justin Trudeau said in a news conference last night that he will impose 25 per cent retaliatory tariffs on US goods worth an eye-watering $107 billion.
But the CEO of Canada's second largest company has slammed Trudeau for not stopping the spiralling trade war.
Tobi Lutke, who co-founded Shopify and is worth an estimated $10 billion, wrote on X: "Canada thrives when it works with America together. Win by helping America win.
"Trump believes that Canada has not held its side of the bargain."
He adds that Trump's demands "are things that every Canadian wants its government to do too".
EU AND UK THREAT
Amidst the trade war chaos sparked by Trump, the Republican slammed the European Union and warned tariffs on goods from its 27 member states will "definitely happen".
In the same breath he refused to rule out tariffs on the UK and called the country "out of line" - but hinted that a deal could be worked out.
Trump explained to the "It might happen with that, but it will definitely happen with the European Union.
"I can tell you that, because they've really taken advantage of I said, you know, we have over $300 billion deficit."
He said how the EU doesn't take America's cars or "farm products," summarising that "they take almost nothing" meanwhile "we take everything".
Most of the UK's exports to the US are services like banking and consulting - things that aren't usually subject to tariffs.
But research suggests that a 20 per cent tariff could lead to a whopping £22 billion in exports from the UK to the US, with sectors like fishing and mining hit the worst, according to the Centre for Inclusive Trade Policy.
MARKETS TUMBLING
Markets have been tumbling in reaction to Trump's tariffs, with London's FTSE 100 Index taking a fall of over 1 per cent on opening.
And the blue chip share index fell by around 1.2 per cent soon after the London market began trading at 8am.
Shares on Asian markets also tumbled in early trade, like Japan's Nikkei opening down 2.9 per cent on Monday morning.
Australia's benchmark, which is often a proxy trade for Chinese markets, also fell 1.8 per cent.
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Stocks in Hong Kong fell a devastating 1.1 per cent, including listings of Chinese companies.
The Paris and Frankfurt stock markets also shed more than two percent.
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