A potential trade war is brewing after U.S. President Donald Trump imposed sweeping tariffs on Mexico, Canada, and China, triggering strong retaliatory responses from Prime Minister Justin Trudeau and President Claudia Sheinbaum. The new tariffs, set to take effect on February 4, impose 25% tariffs on all exports from Mexico and Canada, 10% tariffs on Canadian energy products, and 10% tariffs on Chinese exports.

The White House justified the move as a measure to combat illicit drug trafficking, accusing Mexico, Canada, and China of enabling illegal substances to enter the U.S. White House Press Secretary Karoline Leavitt stated, “Canada, Mexico, and China have all enabled illegal drugs to pour into America.” A White House fact sheet went further, alleging that Mexico’s government has direct ties with drug cartels, a claim Sheinbaum strongly rejected. “We categorically reject the White House’s slander of the Government of Mexico for having alliances with criminal organizations,” she declared, while proposing a joint U.S.-Mexico working group to tackle cross-border drug trafficking.

Trudeau and Sheinbaum wasted no time in responding. Canada announced retaliatory tariffs of 25% on $155 billion worth of U.S. goods, with immediate tariffs on $30 billion worth of imports, followed by further tariffs in three weeks. Trudeau urged Canadians to make economic choices that prioritize local products, saying, “Read labels at the grocery store—choose Canadian rye over Kentucky bourbon, forgo Florida orange juice, and change summer vacation plans to explore Canada.” Sheinbaum revealed that Mexico is implementing a “Plan B” of both tariff and non-tariff countermeasures in defense of its economic interests.

The tariffs are expected to drive up prices for a wide range of consumer goods, including fresh produce such as tomatoes, bell peppers, limes, and mangoes, as well as automobiles and auto parts, which have deep supply-chain ties to Canada and Mexico. Avocados, tequila, and other Mexican exports are also likely to be affected. Timothy Fitzgerald, a business economics professor at the University of Tennessee, warned that gasoline prices could rise by up to 70 cents per gallon due to the heavy reliance on Canadian and Mexican crude oil.

The U.S. Chamber of Commerce strongly criticized the tariffs, calling them unprecedented and economically harmful. Senior Vice President John Murphy stated, “The imposition of tariffs under IEEPA won’t solve these problems and will only raise prices for American families and upend supply chains.” Congressional leaders and industry groups are expected to push back against the tariffs, while trade analysts warn that a full-blown trade war could disrupt North American economies.

Trump has hinted at a possible exemption for oil imports to mitigate fuel price hikes, but officials have not confirmed any such exemption. With retaliatory tariffs already in motion and fears of economic fallout growing, all eyes are on whether diplomatic negotiations can prevent a deeper trade war between the U.S. and its closest neighbors.