U.S. stock markets took a significant hit after President Donald Trump confirmed that 25% tariffs on imports from Canada and Mexico would go into effect on Tuesday. The announcement marked the latest escalation in the trade conflict, which Trump had threatened for months but had previously delayed.
In addition to the tariffs on North American goods, a 10% tariff on Chinese imports is also expected to take effect, further increasing trade barriers for America’s top three trade partners in just a matter of weeks.
Trump declared at the White House on Monday that there was “no room left for Mexico or for Canada,” confirming that the tariffs were “set” and would begin the following day. Canadian Foreign Minister Melanie Joly responded quickly, asserting that her country was “ready” to retaliate if the U.S. went ahead with the tariffs. Ottawa announced plans to impose retaliatory tariffs on U.S. goods worth $155 billion (£122 billion), starting with a first wave of $30 billion in duties on everyday products like pasta, clothing, and perfume.
While Joly stressed that Canada did not want a trade war, she warned that they would respond firmly if the U.S. initiated one, calling the tariffs “an existential threat” to Canada’s economy and jobs.
Both Mexico and China have also indicated they will retaliate, raising concerns of an escalating global trade war. Trump’s justification for the tariffs centers on what he perceives as the unacceptable flow of illegal drugs and immigrants into the U.S. from these countries.
The tariffs, which had been delayed for Canada and Mexico until now, were initially set to take effect last month. The delay had temporarily averted a potential trade war with U.S. neighbors. However, Trump proceeded with imposing a 10% tariff on Chinese goods in February, bringing the total tariff on Chinese imports to at least 20%.
Trump has repeatedly argued that tariffs are an essential tool for correcting trade imbalances and protecting U.S. manufacturing, dismissing concerns about potential economic damage in the U.S., particularly given the longstanding trade relationships with its North American neighbors.
In response to the tariffs, U.S. stock markets experienced a sharp sell-off. The Dow Jones Industrial Average closed the day down by 1.4%, the S&P 500 fell 1.75%, and the Nasdaq dropped 2.6%.
Earlier in the day, officials from Canada and Mexico had been in Washington in an effort to avert the tariffs. Mexican President Claudia Sheinbaum made a statement, emphasizing that “Mexico has to be respected” and asserting that while cooperation is important, “subordination, never.”
Meanwhile, Canadian Prime Minister Justin Trudeau defended Canada’s position, asserting that Canada was not a major source of illegal fentanyl in the U.S., noting that only 1% of fentanyl seized in the U.S. comes from Canada, according to U.S. data.
Chinese officials, too, have indicated they are preparing retaliatory measures. According to China’s state-run Global Times newspaper, Beijing’s countermeasures would likely target U.S. agricultural and food products.
In addition to the tariffs on Canada, Mexico, and China, Trump has also announced a 25% tariff on all steel and aluminum imports, set to take effect on March 12. He has further threatened to impose “reciprocal” tariffs on individual countries, including a potential 25% tariff on European Union goods.
As the trade tensions continue to escalate, market uncertainty is expected to persist, leaving investors to brace for the potential economic impact of the intensifying trade war.
Related topics:
India’s Stock Market Faces Slow Recovery After Deepest Decline in Decades, Analysts Predict
US Stocks Drop as Consumer Confidence Hits Four-Year Low Amid Tariff Concerns
Australian Regulator Pushes for Faster IPO Process to Revitalize Market
