WASHINGTON— President Donald Trump said Monday that 25% taxes on imports from Mexico and Canada would start Tuesday, sparking renewed fears of a North American trade war that already showed signs of pushing up inflation and hindering growth.
“Tomorrow — tariffs 25% on Canada and 25% on Mexico. And that’ll start,” Trump told reporters in the Roosevelt Room. “They’re going to have to have a tariff.”
Trump has said the tariffs are to force the two U.S. neighbors to step up their fight against fentanyl trafficking and stop illegal immigration. But Trump has also indicated that he wants to eliminate the Americas’ trade imbalances as well and push more factories to relocate in the United States.
His comments quickly rattled the U.S. stock market, with the S&P 500 index down 2% in Monday afternoon trading. It’s a sign of the political and economic risks that Trump feels compelled to take, given the possibility of higher inflation and the possible demise of a decades-long trade partnership with Mexico and Canada as the tariffs would go into effect at 12:01 a.m. Tuesday.
Yet the Trump administration remains confident that tariffs are the best choice to boost U.S. manufacturing and attract foreign investment. Commerce Secretary Howard Lutnick said Monday that the computer chipmaker TSMC had expanded its investment in the United States because of the possibility of separate 25% tariffs.
In February, Trump put a 10% tariff on imports from China. He reemphasized Monday that the rate would be doubling to 20% on Tuesday. Trump provided a one-month delay in February as both Mexico and Canada promised concessions. But Trump said Monday that there was “no room left for Mexico or for Canada” to avoid the steep new tariffs, which were also set to tax Canadian energy products such as oil and electricity at a lower 10% rate. Canada Prime Minister Justin Trudeau said Monday that “there is no justification” for Trump’s tariffs. Canada’s foreign minister says her country is ready with a response when President Donald Trump’s tariffs begin Tuesday.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs,” he said. “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.”
Trudeau said his country will retaliate by putting 25% tariffs on American goods worth $155 billion Canadian ($107 billion U.S.) over the course of 21 days, starting with tariffs on $30 billion Canadian ($21 billion U.S.) after midnight Tuesday.
Mexico President Claudia Sheinbaum went into Monday waiting to see what Trump would say.
“It’s a decision that depends on the United States government, on the United States president,” Sheinbaum said ahead of Trump’s statement. “So whatever his decision is, we will make our decisions and there is a plan, there is unity in Mexico.”
Both countries have tried to show action in response to Trump’s concerns. Mexico sent 10,000 National Guard troops to their shared border to crack down on drug trafficking and illegal immigration. Canada named a fentanyl czar, even though smuggling of the drug from Canada into the United States appears to be relatively modest.
