US President Donald Trump recently announced a new set of tariffs aimed at reducing the trade deficit with several key countries. The measures, which went into effect on February 1, 2025, focus on imposing significant tariffs on China, Mexico, and Canada.

The tariffs are set at 25% on imports from Mexico and Canada, and 10% on goods from China. This includes 10% tariff on Canadian oil and gas. These nations are the top contributors to the US trade deficit, with China accounting for 30.2%, Mexico for 19%, and Canada for 14%.

In retaliation, Canadian Prime Minister Justin Trudeau announced that Canada would impose 25% tariffs on US goods worth C$155 billion ($106 billion). Similarly, Mexican President Claudia Sheinbaum stated that Mexico would retaliate against the new US tariffs. China also promised to take "corresponding countermeasures" in response to the 10% tariff on Chinese products, though it has not yet revealed any specific new tariffs.

During a press briefing, Trump explained that the new tariffs were designed to address the significant trade imbalances, particularly with China, Mexico, and Canada, and highlighted the US's growing concerns over the illegal drug trade, specifically fentanyl, which he claimed was being funneled through these countries. “We have big deficits with all three of them,” Trump said. “And in one case, they’re sending massive amounts of fentanyl, killing hundreds of thousands of people a year with fentanyl.”

Trump's tariff announcement underscores his ongoing focus on reducing the US's trade deficit, which has long been a point of contention for the president. In addition to the trade imbalance, Trump also emphasized that the United States is facing a deficit of approximately $200 billion with Canada and a $250 billion deficit with Mexico, which he referred to as "unacceptable."

The US's decision to target China, Mexico, and Canada comes amidst broader trade tensions on the global stage. The European Union (EU) has also expressed concern over the potential for increased tariffs. The EU warned that it would respond firmly if Trump proceeds with imposing tariffs on European goods, marking a new chapter in the ongoing trade disputes between the US and its major trading partners.

The European Commission, the EU’s governing body, made it clear that any new tariffs could disrupt the global economy, contributing to inflation and harming all parties involved. The EU's response highlights the delicate nature of international trade relations, with both the US and the EU having a significant economic stake in maintaining a stable and mutually beneficial trade framework.

While India was excluded from the new tariffs, the country remains a key player in US trade policies. Experts suggest that the exclusion could reflect a strategic decision to preserve positive relations with India, which is viewed as a potential economic partner in the evolving global trade landscape.

Trump’s latest tariff move signals a continued push for protectionist policies aimed at reshaping the global trading system, though the international response suggests that further escalation could be on the horizon.