The global trade wars intensified on Tuesday as the U.S. tariffs on Canada and Mexico took effect and China was slapped an additional 10% levy, prompting retaliatory tariffs and sending equity markets and oil prices lower.
Oil prices were down by 1% in Asian trading early on Tuesday, as markets fear economic slowdown from the tariffs and as OPEC+ confirmed it would begin to gradually return supply to the market, with the first hike of 138,000 barrels per day (bpd) in April.
The 25% tariffs on Canada and Mexico goods, with Canadian energy taxed with 10%, came into effect at 12:01 a.m. EST on Tuesday and were met with immediate retaliatory levies from Canada and China.
China said on Tuesday it would impose additional tariffs of up to 15% on some U.S. goods, mostly U.S. agricultural products including corn and soybeans, from March 10. Beijing will also restrict exports to 15 U.S. companies.
Canada also announced retaliatory tariffs, with 25% on US$107 billion (CAD$155 billion) of American goods – starting with tariffs on US$20.8 billion (CAD$30 billion) worth of goods immediately, and tariffs on the remaining US$86.6 billion (CAD$125 billion) on American products in 21 days’ time, Canadian Prime Minister Justin Trudeau said.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau added.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs. Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term,” the Canadian Prime Minister noted.
Ontario Premier Doug Ford said on Monday he would direct the removal of American alcohol from the Liquor Control Board of Ontario shelves and is ripping up a $100-million deal with Elon Musk’s SpaceX for Starlink internet.
Ford went further on to say that “If they [U.S.] want to try to annihilate Ontario, I will do everything, including cut off their energy with a smile on my face.”
By Tsvetana Paraskova for Oilprice.com
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