JUANA SUMMERS, HOST:
In the early hours this morning, after all the threats, taunts and last-minute climb downs, the Trump administration slapped 25% tariffs on imports from America's two biggest trading partners - Mexico and Canada. Now, China was also on the receiving end of a further 10% tariff on goods, adding to the 10% imposed last month. Both Canada and China hit back with retaliatory tariffs. Mexico promised to follow suit in the coming days. Wall Street immediately reacted, and the stock market tanked for a second day in a row when it opened this morning. Joining us to talk about the impact is NPR's international affairs correspondent Jackie Northam and NPR's Eyder Peralta in Mexico City. Hi to both of you.
EYDER PERALTA, BYLINE: Hey, Juana.
JACKIE NORTHAM, BYLINE: Hi. Good to be here. Thanks.
SUMMERS: Jackie, I'll start with you. What was Canada's response?
NORTHAM: Well, Prime Minister Justin Trudeau immediately pledged that Canada would impose retaliatory tariffs. He said 25% import taxes would be placed on about $100 billion of U.S. products, and that'll be rolled out over the next three weeks. And there are also threats to withhold Canadian crude oil and hydroelectricity to some U.S. industries. You know, Juana, Canada has been bracing for these tariffs ever since Trump first threatened to unveil them a month ago. And still during, you know, a lengthy press conference today, Trudeau seemed incredulous that Trump went ahead with them.
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PRIME MINISTER JUSTIN TRUDEAU: The United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they're talking about working positively with Russia, appeasing Vladimir Putin - a lying, murderous dictator. Make that make sense.
NORTHAM: And, you know, Trudeau warned that Trump's decision to place steep tariffs on the country will cause Canadians a lot of economic pain, and he urged them to stay strong and united.
SUMMERS: Eyder, over to you. Mexico's Claudia Sheinbaum has also been talking. What has she had to say?
PERALTA: I mean, it was a different approach. The strategy for Mexico has been to try to keep calm. They have tried not to antagonize President Trump. Even today, President Claudia Sheinbaum gave a very sober speech. She said President Trump was breaking a free-trade deal he signed himself. She said this unilateral move was senseless and said there was no reason to do this.
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PRESIDENT CLAUDIA SHEINBAUM: (Speaking Spanish).
PERALTA: "It's time to defend Mexico," she said. "We have to be poised, but we also have to keep a cool head." And to that end, she did not announce any retaliatory measures. Instead, she called on Mexicans to show up at the Zocalo, which is the main square here in Mexico City on Sunday, where she would announce how Mexico would respond. But what you get the feeling is is that she delayed responding in order to try to talk to President Trump and try to get these tariffs removed before Sunday.
SUMMERS: Well, as both of these leaders have said, there are no winners in a trade war. So what's likely to be the impact on both sides of the border? Eyder, you first.
PERALTA: I mean, economists here are saying recession. One economist said that it feels like the beginning of the pandemic. No one knows what's coming or how long it will last. Eighty percent of Mexico's exports go to the United States. Mexico is the United States' biggest trading partner. We're talking billions and billions of dollars in trade, everything from fuel to cars to electronics to plastic to cereals to avocados. Prizes - prices will rise in both countries, and we may see mass layoffs. So Octavio de la Torre, the president of Concanaco, a conglomerate of Chambers of Commerce, says the U.S. stock markets are reacting negatively for a reason.
OCTAVIO DE LA TORRE: (Speaking Spanish).
PERALTA: You can't isolate the effect only to Mexico, he said, because American companies are doing a ton of work here. For example, one of the biggest exporters here is - here in Mexico is General Motors, an American car manufacturer.
SUMMERS: And, Jackie, what about in Canada? What's the likely impact there?
NORTHAM: Well, economists and analysts are predicting that this could send Canada into a recession as well. No one knows how long it's going to last, and Trudeau's talked about extending unemployment insurance for workers and helping businesses hard hit by tariffs. But, you know, there's already talk of seeing higher costs and contracts being canceled. Some provinces are going beyond federal efforts to retaliate. For example, Ontario canceled a $100 million contract with Starlink, and that's Elon Musk's satellite internet company.
SUMMERS: Well, I mean, as we already mentioned, these two countries are the U.S.' biggest trading partners, but, Jackie, looking beyond trade for a moment, what's the likely knock on effect?
NORTHAM: Yeah, I mean, Canada feels it was more than a trading partner. It was a longtime ally, and now that's shattered. And, you know, effectively, this is Trudeau's last week in office, and I think he may have felt free to go out on a limb. At a press conference, he suggested that Trump's real goal is to collapse Canada's economy so the U.S. could annex the country. And at one point, Juana, Trudeau addressed Trump directly. He looked directly straight into the camera and called him by his first name as he referred to a recent editorial in the Wall Street Journal.
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TRUDEAU: Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do.
NORTHAM: And no surprise, Trump responded dismissively, calling him Governor Trudeau and threatening more tariffs likely next month.
SUMMERS: Eyder, I'll let you have the last word here. What about in Mexico?
PERALTA: I mean, look, this Mexican-American partnership has not been easy to build. These are two countries that have been at war. Mexico lost half its territory to the United States. And one thing that the Mexican president keeps saying is that this partnership, which has been forged for the past 30 years or so, is in the end, a good thing. It has meant a robust Mexican economy. It means the countries are living peacefully in what has become the biggest market in the world. And now it seems President Trump is throwing that away. And the Mexican president is already talking about finding new markets.
So the question is, do these tariffs stick around long enough for Mexico to turn away from North America? Do these tariffs stick around long enough to undo what has become a special relationship between Mexico and the U.S.? And the big question is, does this mark an end to globalism?
SUMMERS: That is NPR's Eyder Peralta and Jackie Northam. Thanks to both of you.
NORTHAM: Thank you.
PERALTA: Thank you, Juana. Transcript provided by NPR, Copyright NPR.
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