China moved swiftly to retaliate against higher U.S. tariffs that went into effect on Tuesday, announcing new duties on a slate of American agriculture exports, while Canada implemented the first step of its two-step retaliation plan.
Canadian and Mexican officials, however, are still in talks with the administration to negotiate a solution. Commerce Secretary Howard Lutnick told Fox Business Tuesday afternoon that the administration could meet them “in the middle” tomorrow.
President Donald Trump signed an executive order on Monday hiking a tariff he applied to all Chinese goods last month from 10% to 20% over concerns China has not done enough to address fentanyl production in its borders. Just hours later, new tariffs on Canada and Mexico also went into effect.
Accordingly, China’s State Council announced new 15% duties on U.S. chicken, wheat, corn and cotton, set to begin Monday. Sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products, the Council said, will face a new 10% duty.
In addition to the tariff measures announced, Beijing added more than a dozen U.S. companies to its export control list, requiring Chinese exporters to seek approval before making any sales to the firms. It also indicated it would file a lawsuit at the World Trade Organization, as it did last month when the initial 10% U.S. duties went into effect.
“If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” Chinese Foreign Ministry Spokesperson Lin Jian said during a Tuesday press conference.
China is a significant market for U.S. ag, accounting for around 16% of all exports in 2023, including more than half of all soybean exports and a quarter of U.S. cotton exports, according to the Agriculture Department.
Beijing had largely spared the U.S. ag sector following Trump’s first tariff hike last month. U.S. agricultural machinery faced retaliatory duties alongside U.S. energy products and crude oil, but commodities and food products emerged unscathed.
The latest tariff salvos mark a ratcheting up of trade tensions early in Trump’s second term. Chinese retaliation on U.S. export products during Trump’s first term led to more than $27 billion in export losses for U.S. farmers and trade escalations were brought to an end only with the negotiation of the phase one agreement – in which China agreed to increase purchases of key U.S. exports, including agriculture.
Beijing did not live up to the agreement, falling short of its purchasing targets. But some in the administration and the U.S. ag sector have suggested the U.S. could do more to press China to meet its initial phase one commitments.
Planned Canadian retaliatory tariffs also went into effect after midnight on Tuesday. The first wave of retaliation involves duties on some $20 billion (C$30 billion) of U.S. goods, including certain tomatoes and other fruits, out-of-quota dairy products and certain prepared foods. After 21 days, a further $86 billion (C$125 billion) of U.S. exports are set to face new duties, which Canada has said will also feature plenty of U.S. agricultural products.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs,” Prime Minister Justin Trudeau said in a statement on Monday night.
Ontario’s Premier Doug Ford also outlined plans to slap 25% tariffs on energy exports from his province. Ontario provides around 1.5 million homes in border states Minnesota, Michigan and New York with electricity.
In a press conference Tuesday morning, Trudeau also previewed forthcoming non-tariff measures but declined to elaborate on what those measures might be. He did not rule out new taxes on potash exports but reiterated a point he has previously made: that no industry or geography should carry a disproportionately large economic burden from retaliation.
Saskatchewan produces all of Canada's potash, according to Saskatchewan’s government.
Trudeau is meeting with the Canadian premiers on Tuesday afternoon, he said, to discuss provincial responses. He also plans to speak with President Trump in the coming days.
“Our focus has to be on getting these tariffs lifted as quickly as possible,” Trudeau said.
Following Trudeau's press conference, however, President Trump took to Truth Social to warn the U.S. would meet Canadian retaliation with further tariffs.
"Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!" Trump wrote, reviving his "governor" moniker for the Canadian prime minister that he has oft-repeated since floating the idea of Canada becoming a U.S. state.
Trump's executive order imposing the new tariffs includes a clause explicitly stating the president may increase or expand duties in response to partners' retaliation.
Mexican President Claudia Sheinbaum told reporters on Tuesday that Mexico would also retaliate with tariffs, set to be unveiled during a public address on Sunday.
U.S. meat exporters are eying that announcement with some trepidation. The U.S. is the predominant supplier of red meat to Mexico, according to a statement from the U.S. Meat Export Federation published Tuesday, but is facing headwinds.
"U.S. red meat has already been facing heightened competition in this critical market," said USMEF President and CEO Dan Halstrom.
