Markets Tumble as Trump Announces Tariffs on Canada, Mexico, and China

President Donald Trump confirmed that he will implement a 25% tariff on goods imported from Canada and Mexico into the US, stating that the deadline for reaching an agreement has passed.

US stock markets plunged in response to the announcement, which Trump had been threatening since earlier this year and confirmed would take effect on Tuesday.

A 10% tariff on Chinese imports is also set to be enforced, meaning that all three of America's top trading partners will face much higher trade barriers than just a few weeks ago.

"No room left for Mexico or for Canada," Trump said at the White House on Monday. "The tariffs, you know, they're all set. They go into effect tomorrow."

Immediately following Trump's comments, US equities turned downward and did not resume any reasonable recovery: the Dow red closed 1.4%, the S&P was down by 1.75%, whereas the Nasdaq slipped by 2.6%.

Reacting to this, Prime Minister Justin Trudeau said, "Canada will not let this unjust decision go unanswered."

Canadian Foreign Minister Melanie Joly told reporters that Ottawa plans to retaliate against C$155bn in US imports; the first cut of $30bn would go into immediate effect on items like pasta, clothing, and perfume.

Joly further stressed that "an existential threat looms," adding, "Thousands of jobs in Canada are at risk from these tariffs."

On Tuesday, in retaliation against the most recent tariffs imposed by the US, the Ministry of Commerce of China declared that the Trump administration was "shifting blame" and "bullying" China with regard to the trafficking of fentanyl.

In a statement, the Ministry called upon the US government to "immediately withdraw" the tariffs which were "unreasonable and unfounded harming to others."

In its report published on Monday, the state-controlled Global Times said that in retaliation, China may target the agricultural and food products of the US with tariff and non-tariff measures.

Mexico also announced retaliations against US tariffs, therefore increasing the prospects of a large-scale trade war.

In reaction to what Trump called unacceptable drug flow and immigration into the US, tariffs against imports were instituted by Trump in the first place in Canada, Mexico, and China.

The tariffs were originally to be enforced last month, but the United States agreed to postpone them against Canada and Mexico for one month, thereby momentarily averting a potentially damaging trade war with its North American neighbors.

However, Trump continued with imposing 10 percent tariffs against Chinese exports to the United States in February, meaning that, at a minimum, goods from China would now attract tariffs of 20 percent.

Trump has always contended that tariffs are a good way to deal with a trade imbalance and to protect US manufacturing.

Despite warning signs that such measures could harm the US economy due to the long-standing trade relationships, especially in North America, where businesses have benefited from decades of free trade, he has largely dismissed such concerns.

"What they'll have to do is build their car plants, frankly, and other things, in the United States, in which case they have no tariffs," he added.

In recent days, officials from Canada and Mexico had been in Washington, working to prevent the tariffs.

Earlier on Monday, Mexican President Claudia Sheinbaum seemed to send a message to Trump during a public event in Colima, stating, "Mexico must be respected."

"Co-operation [and] co-ordination, yes, subordination, never."

On Monday, Trudeau met with King Charles in the UK, stating beforehand that he would address matters of importance to Canadians, including "defending our sovereignty and independence as a nation."

A day earlier, during a summit in London, Canada's Prime Minister emphasized that Canada was "not an issue" when it comes to the source of illegal fentanyl in the US.

According to US data, only 1% of fentanyl seized in the US is believed to originate from Canada.