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The Battle Begins - How Long will Trump's Trade Wars Last Between China, Canada and Mexico?

Our experts can help if you're covering the impact of tariffs and America's new approach to trade

Mar 5, 2025

3 min

William Luther, Ph.D.

It has begun.  March 04 signaled the first day of what could be a long and drawn out trade war between America and it's two closest neighbors and trading partners - Canada and Mexico.


President Trump also doubled the tariff he slapped last month on Chinese products to 20%.


Markets are reeling, politicians are scrambling and the world is watching to see how the tariffs on Mexican and Canadian imports will affect consumers and the economy.


In Canada, the reaction was swift. Businesses pulled American bourbon, wine and other imported spirits from store shelves along. Canada also threatened to turn off imported power that keeps the lights on and factories running in states like Michigan, Minnesota and New York.


As well, Canadian Prime Minister, Justin Trudeau announced  immediate retaliatory measures.


Trudeau said Canada will not back down from a fight in the face of "completely bogus and completely unjustified" trade action that has the potential to ruin bilateral relations and prompt job losses, economic devastation and higher inflation on both sides of the border.

Trudeau has already slapped tariffs on an initial tranche of $30 billion worth of American goods and promised $125 billion more will face levies in three weeks' time. He said more, non-tariff measures are coming if Trump doesn't immediately back down.

Trudeau said Trump is doing something "very dumb" by attacking Canada like this, given there will be serious ramifications for American workers and consumers with higher prices on everything from food, car parts and fertilizers to pharmaceuticals and paper products.  March 04 - CBC News



Meanwhile, there have been some indicators that President Trump may be willing to negotiate.



President Donald Trump will “probably” announce tariff compromise deals with Canada and Mexico soon, Commerce Secretary Howard Lutnick said Tuesday.

The potential agreements would likely involve scaling back at least part of Trump’s brand new 25% tariffs on imports from Mexico and Canada, he added.

Lutnick’s comments came minutes after the U.S. stock market limped to a close for a second day of sharp declines, spurred at least in part by investors’ fears that Trump’s aggressive policies will ignite a crippling trade war.

After his remarks, U.S. stock futures tied to all three major averages rose.

The compromises with Canada and Mexico will likely be revealed as soon as Wednesday, Lutnick said on “Fox Business.” March 04- CNBC News



There's a lot of speculation out there - and lingering questions:


  • What key American industries will benefit, which ones will suffer?
  • When and will consumers see price hikes at the stores?
  • Will there be a lasting negative impact felt on the American economy?
  • What does this mean for the USMCA that was currently in place?



If you're a journalist covering tariffs and the trade war - then let us help.



William J. Luther, Ph.D., is an associate professor of economics at Florida Atlantic University, director of the American Institute for Economic Research’s Sound Money Project, and an adjunct scholar with the Cato Institute’s Center for Monetary and Financial Alternatives


William is available to speak with media. Simply click on his icon now to arrange an interview today

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William Luther, Ph.D., is an expert in monetary economics and macroeconomics.

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