When US President Donald Trump announced tariffs on Mexico, Canada, and China during his first term, the world watched closely. His stated rationale for these actions was to combat the trade of the synthetic opioid fentanyl, though critics viewed it as a legal pretext for emergency action that would typically require congressional approval. While one country swiftly retaliated, others adopted a more cautious stance, watching how events would unfold. The European Union and other global players were also closely monitoring the situation, especially as Trump’s policies raised concerns about economic repercussions.
Trade War Begins
Trump’s decision to impose tariffs on Mexico, Canada, and China marked the opening salvo in a trade war that would set the stage for a global economic ripple effect. He imposed 25% tariffs on goods from Mexico and Canada and a 10% tariff on Chinese imports. While Trump defended these tariffs as necessary to combat fentanyl trade and protect US interests, it was clear that this move would escalate tensions with key global trade partners.
Trump’s public comments about trade with the UK and EU, including potential tariffs on the latter, also fueled uncertainty. Despite some dialogue with UK Prime Minister Keir Starmer, Trump remained focused on confronting the EU over what he claimed was an unequal trade relationship. The administration’s stance on trade became a central theme of the President’s policies, driving much of the early foreign response.
Canada’s Defiant Response
Canada wasted no time in announcing a strong retaliation to Trump’s tariff impositions. Mark Carney, a frontrunner for Canada’s next prime minister, made it clear that Canada would not back down. “We will retaliate… dollar for dollar,” Carney declared, ridiculing Trump’s justification for the tariffs and emphasizing that Canada would “stand up to a bully.” Carney’s stance underscored Canada’s determination to face the US head-on in this trade conflict.
Prime Minister Justin Trudeau also expressed his discontent, signalling that Canada would not let the US impose tariffs without a response. Whether or not Carney eventually assumes leadership, Canada’s firm stance in the face of these tariffs revealed its commitment to challenging any perceived injustices in trade relations.
Mexico Seeking Dialogue, Not Confrontation
Mexico’s response to Trump’s tariffs was more measured, with President Claudia Sheinbaum advocating for dialogue over confrontation. In her statement, Sheinbaum emphasized that “problems are not addressed by imposing tariffs, but with talks and dialogue.” Despite calling for diplomatic engagement, she affirmed that Mexico would not accept subordination, signalling a defiant, yet diplomatic approach to the escalating trade war. Mexico also announced that it would implement retaliatory tariffs on US goods in response to Trump’s actions, although further details were yet to be disclosed.
In conversations with Canadian leaders, Sheinbaum also expressed her commitment to working together against Trump’s policies, highlighting the collaborative stance both nations would adopt in facing the US tariffs.
China’s Legal Countermeasures and Retaliation
China, one of the hardest-hit nations by Trump’s tariff measures, wasted no time in signalling its intention to counteract. The Chinese government expressed its intention to file a lawsuit with the World Trade Organization (WTO), calling Trump’s tariffs a “serious violation” of global trade rules. This lawsuit was seen as a largely symbolic gesture, with China seeking to challenge the legitimacy of the tariffs under international law.
Furthermore, China warned of corresponding countermeasures to “safeguard its own rights and interests,” though the specific actions remained unclear at the time. Chinese officials were adamant that there were no winners in a trade war and cautioned that the tariffs would not solve the US’s problems but instead undermine global economic cooperation.
India’s Non-Protective Stance
In stark contrast to the protectionist policies championed by the US, India took a different approach by signalling a shift toward lower tariffs. India’s Finance Secretary, Tuhin Kanta Pandey, emphasised that India was moving away from protectionist measures. In early February 2025, India announced tariff reductions on a wide range of goods across sectors such as electronics and textiles. Pandey’s comments reflected India’s commitment to providing a stable and predictable policy environment for international investors, even amidst rising global trade tensions.
India’s approach was seen as a clear departure from the protectionist rhetoric of the US, focusing instead on market liberalisation and economic cooperation.
Finance Minister Nirmala Sitharaman stated that while India is closely monitoring the U.S. tariffs on Mexico, Canada, and China, it is too early to predict their direct impact. She emphasized vigilance, acknowledging potential indirect effects on global trade, and assured that India would adapt as necessary to evolving economic conditions.
Europe and UK cautious
The European Union, while not immediately reacting with retaliatory measures, closely watched the unfolding events. There was speculation that the EU would take steps to protect its interests, particularly with the US turning its focus on what Trump called an “unequal” trade relationship with the EU.
Europe’s response, particularly regarding the US demand for increased purchases of liquefied natural gas or military equipment, appeared largely focused on mitigating any fallout and finding areas of cooperation. Though European leaders avoided direct criticism of Trump’s tariff strategy, their actions suggested a watch-and-wait approach as they gauged the longer-term implications of the US tariffs on global trade dynamics.
U.S. President Donald Trump has spoken positively about his relationship with UK Prime Minister Sir Keir Starmer, stating that they have had multiple meetings and phone calls and are “getting along very well.” However, while addressing potential tariffs on UK and EU trade, Trump remarked that the UK is “out of line” in its trade relationship with the US but expressed confidence that the issues could be resolved.
When asked whether he planned to impose tariffs on the UK, Trump remained noncommittal, saying, “We’ll see what happens.” He later softened his stance, adding, “It might happen, but I think that one can be worked out.” His comments suggest that while tensions exist over trade policies, he is open to negotiations with the UK. Meanwhile, Trump was more assertive about the European Union, stating that trade tariffs on the EU were inevitable and would “definitely happen.”
Economic Fallout
Experts warned that the ripple effect of these tariffs could plunge both the Canadian and Mexican economies into recession. With exports to the US accounting for a significant portion of their GDP, these countries were set to bear the brunt of the trade war. The tariffs, along with anticipated surges in US inflation, were expected to have far-reaching consequences, potentially destabilising economies in North America and beyond.
China’s retaliatory measures, combined with India’s proactive stance toward liberalisation, suggested that this trade conflict would evolve into a prolonged period of global economic uncertainty, with countries seeking to mitigate damage while protecting their own national interests.
The reactions to Trump’s tariffs have been varied, with some countries opting for swift retaliatory actions and others choosing a more cautious, diplomatic approach. The outcome of this trade war remains uncertain, but its effects will undoubtedly be felt across global markets and trade relations for years to come.