WASHINGTON -- Retaliation came swiftly and Illinois leaders warned of potential harm to the state's economy as President Donald Trump's new tariffs on goods from Canada, Mexico and China took effect Tuesday.
The move drew immediate retribution from all three nations and sent financial markets into a tailspin, though it didn't come as a surprise. Gov. JB Pritzker and both of Illinois' U.S. senators -- all Democrats -- warned of negative consequences for the state, which counts the three nations among its top five trading partners.
Pritzker, who has been a vocal critic of Trump, said the measures "will have a devastating impact on Illinois' manufacturing and agriculture sectors and will hurt hardworking Illinoisans at the grocery store checkout, on their utility bills, and at the gas pump."
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Just after midnight, Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%.
Beijing retaliated with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.
Canadian Prime Minister Justin Trudeau said his country would plaster tariffs on more than $100 billion worth of American goods over the course of 21 days.
Mexican President Claudia Sheinbaum said Mexico will respond to the new taxes with its own retaliatory tariffs. Sheinbaum said she will announce the products Mexico will target on Sunday in a public event in Mexico City's central plaza, perhaps with the delay indicating Mexico still hopes to de-escalate the trade war set off by Trump.
Why is this happening?
As he promised voters, the U.S. president is abandoning the free trade policies the United States pursued for decades after World War II. Trump argues that open trade cost America millions of factory jobs and that tariffs are the path to national prosperity. He rejects mainstream economists who contend that such protectionism is costly and inefficient.
In principle, a country would levy tariffs to encourage domestic industry by making imports more expensive.
Import taxes are "a very powerful weapon that politicians haven't used because they were either dishonest, stupid or paid off in some other form," Trump said Monday at the White House. "And now we're using them."
U.S. markets dropped sharply Monday after Trump said there was "no room left" for negotiations that could lower the tariffs. Shares were mostly lower Tuesday after they took effect.
The Canada and Mexico tariffs were supposed to begin in February, but Trump agreed to a 30-day suspension to negotiate further with the two largest U.S. trading partners.
The stated reason for the tariffs is to address drug trafficking and illegal immigration, and both countries say they have made progress on those issues. But Trump has also said the tariffs will only come down if the U.S. trade imbalance closes, a process unlikely to be settled on a political timeline.
The tariffs may be short-lived if the U.S. economy suffers. But Trump could also impose more tariffs on the European Union and India and on such products as computer chips, autos and pharmaceutical drugs.
What do the tariffs mean for Illinois?
Elected officials are worried about the impact of retaliatory measures on the fifth-largest exporting state, where Pritzker's administration has sought to expand trade partnerships. Since 2019, Illinois' exports have increased 32% -- or roughly $19 billion, according to state data.
Canada is the state's top partner for both imports and exports as of 2023, the most recent year for which data is available. Illinois sent more than $20 billion worth of goods to the country and imported over $65 billion worth, mostly in the form of natural gas and oil.
Illinois imported over $18 billion worth of goods from Mexico in 2023, the most recent year for which data is available. It exported nearly $13 billion, a 39% increase from 2019 figures.
The state's exports to Mexico include over $2 billion in agricultural products like corn and soybeans. Illinois Farm Bureau President Brian Duncan said Tuesday that the organization was "deeply concerned" about the tariffs and potential for retaliation on goods exported from the U.S.
"Illinois farmers' products -- from grains and feed, corn, soybeans, ethanol, beef, pork, and more -- rely on access to foreign markets and will undoubtedly be impacted by these new tariffs either through increased prices or decreased market access," Duncan said in a statement. "This uncertainty coupled with an already struggling farm economy has farmers worried as we head into planting season."
Illinois exported over $4 billion in goods to China, with the largest share -- over $1 billion -- in agricultural products. Imports from China total more than $43 billion, with the largest share -- over $27 billion -- in computers and electronic products.
What are lawmakers saying?
Democratic lawmakers in Illinois and beyond were quick to criticize the tariffs, and even some Republican senators raised alarms.
"While the President claims that foreign countries will pay for U.S. tariffs, that isn't the truth and we know what the truth is -- the burden of tariffs is carried by American companies and passed on to American customers," Durbin said in a speech on the Senate floor Tuesday.
Sen. Susan Collins, R-Maine, said she's "very concerned" about the tariffs going into effect because of her state's proximity to Canada.
"Maine and Canada's economy are integrated," Collins said, explaining that much of the state's lobsters and blueberries are processed in Canada and then sent back to the U.S.
U.S. Rep. Nikki Budzinski, a Springfield Democrat whose 13th Congressional District includes much of Central Illinois' rich farmland, expressed concern about how farmers would be affected. She called Trump's approach "reckless" in a post on social media, adding, "This trade war unleashed by the president is a disaster for Illinois growers and producers."
What's next?
The White House would like to see a drop in seizures of fentanyl inside the United States, not just on the northern and southern borders. Administration officials say that seizures of fentanyl last month everywhere from Louisiana to New Jersey had ties to foreign cartels.
Tim Houston, the leader of Canada's Atlantic coast province of Nova Scotia, said he would direct the Nova Scotia Liquor Corporation to remove all U.S. alcohol from store shelves. Houston also said his government will limit access to provincial procurement for American businesses and double the cost for commercial vehicles from the United States on a tolled highway.
The Trump administration has suggested inflation will not be as bad as economists claim, saying tariffs can motivate foreign companies to open factories in the United States. On Monday, Trump announced that Taiwan Semiconductor Manufacturing Company, the computer chipmaker, would be investing $100 billion in domestic production.
Gillies reported from Toronto. Associated Press writers Anne D'Innocenzio in New York, Lisa Mascaro in Washington and and Maria Versa in Mexico City contributed to this report.
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