US President Donald Trump said yesterday that 25 per cent tariffs on goods from Mexico and Canada will definitely take effect tonight, raising fears of a trade war in North America and sending financial markets reeling.
“They’re going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” Trump said at the White House. He said there was “no room left” for a deal that would avert the tariffs by curbing fentanyl flows into the US.
Trump’s comments sent US stocks down sharply in late afternoon trading. The dollar rose against the Mexican peso and the Canadian dollar following his remarks.
Trump also said reciprocal tariffs would take effect on April 2 on countries that impose duties on US products.
CEOs and economists say the action, covering more than $900 billion worth of annual US imports from its southern and northern neighbours would deal a serious setback to the highly integrated North American economy.
The tariffs are scheduled to take effect at 12.01am EST (0501 GMT). At that point Canada and Mexico face tariffs of 25pc, with 10pc for Canadian energy.
Canadian Foreign Minister Melanie Joly told reporters that Ottawa was ready to respond. “There’s a level of unpredictability and chaos that comes out of the Oval Office, and we will be dealing with it,” she said.
Speaking on CNN, US Commerce Secretary Howard Lutnick said both countries had made progress on border security but needed to do more to curb fentanyl flows into the US to reduce deaths from the opioid drug.
Trump was also expected today to raise fentanyl-related tariffs on Chinese imports to 20pc from 10pc currently, unless Beijing ends fentanyl trafficking into the US. Lutnick did not mention any potential changes to these duties, which would affect about $439bn worth of annual imports.
Mexico, after avoiding the first round of Trump’s tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.
President Claudia Sheinbaum, at a Press conference before Trump made his remarks, said her government was calm as it awaited Trump’s decision, but that Mexico but would respond if tariffs were imposed.
“We have a plan B, C, D,” Sheinbaum said, adding that co-ordination with the US on trade and fentanyl trafficking has been “very good.”
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