WASHINGTON, March 4 (Reuters): US President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%, sparking trade wars that could slam economic growth and lift prices for Americans still smarting from years of high inflation.
The tariff actions, which could upend nearly $2.2 trillion in annual US trade with its top three trading partners, went live at 12:01 a.m. (0501 GMT). Trump declared that all three countries had failed to do enough to stem the flow of the deadly fentanyl opioid and its precursor chemicals into the US.
China responded immediately, announcing additional tariffs of 10%-15% on certain US imports from March 10 and a series of new export restrictions for designated US entities. Later it said it had raised complaints about the new measures with the World Trade Organization.
Canada and Mexico, which have enjoyed a virtually tariff-free trading relationship with the US for three decades, were poised to immediately retaliate.
Canadian Prime Minister Justin Trudeau said Ottawa was launching 25% tariffs on C$30 billion ($20.7 billion) worth of US imports, including orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.
Trudeau said Canada would slap tariffs on another C$125 billion of US imports if Trump's tariffs were still in place in 21 days. Consultation over these produce were still taking place, but they are expected to include vehicles, steel, aircraft, fruits and vegetables, beef and pork.
"Tariffs will disrupt an incredibly successful trading relationship," Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.
Ontario Premier Doug Ford told NBC that he was ready to cut off shipments of nickel and transmission of electricity from his province to the US.
Mexican President Claudia Sheinbaum said on Tuesday there was "no reason, rationale or justification" for Trump's actions after Mexico took "decisive actions" against organized crime and fentanyl trafficking.
She vowed retaliation and said she would announce Mexico's response at an event on Sunday in Mexico City's iconic Zocalo square.
The European Union's executive Commission said it "deeply regrets" the decision, which risked disrupting global trade. Trump has vowed to impose "reciprocal tariffs" on EU goods on April 2.
PRICE HIKES
The tariffs were already sparking some US price increases, running counter to Trump's election vow to bring down living costs for Americans.
Target CEO Brian Cornell told CNBC that the retail giant would increase prices "over the next couple of days" on some seasonal grocery products such as avocados from Mexico.
"If there's a 25% tariff, those prices will go up...certainly over the next week," Cornell said.
Electronics retailer Best Buy also warned of potential higher prices as the tariffs came into effect. Best Buy CEO Corie Barrie told analysts on a call that China remains the top source of products sold by the company, with Mexico in second place.
The 20% tariff on Chinese imports will apply to several key Chinese electronics categories untouched by prior duties, including smart phones, laptops, video game consoles, smart watches and speakers and Bluetooth devices.
Barrie said the price increases could play out over a longer period, as Best Buy typically carries about six weeks worth of inventory.
