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The US will press ahead with steep tariffs on Canada and Mexico from Tuesday, Donald Trump has said, setting the stage for a trade war with his country’s two largest economic partners.
Hours before his administration was due to hit America’s closest neighbors with sweeping import duties, the US president claimed there was “no room left” for a deal to avoid their imposition. The announcement led to a sharp sell-off on Wall Street.
All Mexican exports to the US are set to face a levy of 25% under the plans. Most Canadian exports will face a 25% tariff, with energy products facing a 10% duty.
A 10% levy on China – introduced last month – will be doubled to 20%, according to an executive order released by the White House. Tariffs are a “very powerful weapon”, Trump told reporters at a news conference.
The action is set to prompt swift retaliation. “We’re ready,” said the Canadian foreign minister, Mélanie Joly.
Wall Street fell sharply after Trump’s remarks, with the S&P 500 down 1.7%, the Dow Jones industrial average down 1.5%, and the tech-heavy Nasdaq dropping over 2.6%.
The tariffs will affect $900bn in annual imports from Canada and Mexico. The Ford CEO, Jim Farley, has warned they threaten to “blow a hole” in US industry.
Trump has reluctantly conceded in recent weeks that higher tariffs could lead to higher prices in the US, but suggested the impact would be worth the cost. He has brushed off calls to tread carefully, escalating threats to go further.
“Tariffs are easy, they’re fast, they’re efficient, and they bring fairness,” Trump said. He described the levies as a “a powerful weapon” that other presidents had not used because “they were dishonest, stupid or paid off in some other form”.
Trump even took a swipe at Republican hero and staunch free-trader president, Ronald Reagan. “I’m a huge fan of Ronald Reagan but he was very bad on trade,” said Trump.
Tariffs are “an act of war, to some degree”, the billionaire investor Warren Buffett warned recently. “Over time, they are a tax on goods,” he told CBS News. “I mean, the Tooth Fairy doesn’t pay ’em!”
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On Monday, Trump also pledged to impose tariffs on overseas agricultural goods within weeks. He claimed his administration would introduce tariffs on farm products from 2 April.
A string of such deadlines – including vows to hit Canada and Mexico with tariffs in January, and then February – have been delayed, however, as economists and business leaders urge caution.
“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States,” Trump wrote on Truth Social, his social network, on Monday. “Tariffs will go on external product on April 2nd. Have fun!”
