"For American businesses and consumers, this would mean higher prices, increased costs for inputs, and a less competitive business environment," said Stephen Tapp, the Canadian Chamber of Commerce's chief economist.
BEIJING, Nov. 27 (Xinhua) -- As U.S. President-elect Donald Trump vowed Monday to impose a sweeping 25 percent tariffs on all imports from Canada and Mexico, political leaders, business groups, and economists across North America sounded alarms about the potential economic fallout.
Trump announced Monday his intention to sign the executive order on his first day back in office, citing the need to address the "long simmering problem" of illegal immigration and drug trafficking into the United States.
The announcement jolted both Canadian and Mexican markets. Canada's primary stock exchange dipped sharply on Tuesday, as more than 77 percent of Canadian exports are destined for the United States, according to Canada's central bank. The Mexican peso declined by 2.5 percent against the U.S. dollar.
Economists at Mexican bank Banorte warned about "caution among investors as increased trade and political tensions between the United States and other countries loom on the horizon," according to Reuters' report.
Canadian Prime Minister Justin Trudeau convened an emergency meeting with provincial premiers to discuss the economic implications. After speaking with Trump, Trudeau sought to calm fears, though many political leaders remained skeptical.
British Columbia Premier David Eby warned on X that the tariffs "would hurt Canadians and Americans alike," while Ontario Premier Doug Ford called Trump's threats "unfair."
Ford, who oversees Canada's largest provincial economy, told reporters that "it's like a family member stabbing you right in the heart, we have to retaliate."
Mexican President Claudia Sheinbaum Pardo indicated that Mexico could retaliate with its own tariffs. "One tariff would be followed by another in response, and so on until we put at risk common businesses," Sheinbaum said, referring to U.S. automakers that have plants on both sides of the border.
U.S. consumers could see higher prices for a range of groceries, as Mexico is a leading supplier of fresh produce, with vegetables accounting for 69 percent and fruit 51 percent of U.S. imports in 2022. The move also raised concerns among automakers with significant manufacturing operations in Mexico.
"It is unacceptable and would cause inflation and job losses in Mexico and the United States," the Mexican president said, adding that "If tariffs go up, who will it hurt? General Motors."
"For American businesses and consumers, this would mean higher prices, increased costs for inputs, and a less competitive business environment," said Stephen Tapp, the Canadian Chamber of Commerce's chief economist, in an interview with the Canadian Press.
A model by the chamber estimates that a 10 percent tariff alone would shrink Canada's GDP by 0.9 to 1 percent, costing approximately 30 billion Canadian dollars (21.3 billion U.S. dollars) annually, while the United States could lose 125 billion (88.8 billion U.S. dollars) a year. A 25 percent tariff would likely amplify these losses, according to the Canadian Press report.
Critics of Trump's proposal also argue that it undermines the United States-Mexico-Canada Agreement, which replaced NAFTA in 2020. This agreement, negotiated by Trump's administration, was meant to stabilize and deepen trade ties between the three nations. The agreement is up for review in 2026, and the proposed tariffs could cast doubt on its future reliability.
Candace Laing, head of Canada's Chamber of Commerce, warned that Canada might need to rethink its historically cooperative approach to U.S. trade disputes. "To him (Trump), it's about winners and losers -- with Canada on the losing end," Laing was quoted by the Canadian Press as saying.
"Canada's signature approach needs to evolve: we must be prepared to take a couple of punches if we're going to stake out our position," she said. ■