Trump Imposes 25% Tariffs on Mexico, Canada, Markets Drop

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Trump Imposes 25% Tariffs on Mexico, Canada, Markets Drop \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ President Donald Trump announced 25% tariffs on imports from Mexico and Canada, set to take effect Tuesday at 12:01 a.m., igniting fears of a North American trade war. The move, aimed at pressuring both nations on fentanyl and immigration, also threatens higher inflation and supply chain disruptions. Both Canada and Mexico vowed retaliation, while U.S. markets plunged following the announcement.

Trump’s 25% Tariffs on Mexico, Canada: Quick Looks

Tariffs Begin Tuesday – 25% duties on imports from Mexico and Canada start at 12:01 a.m.
Market Reaction – The S&P 500 fell 2% as investors fear higher inflation and supply chain disruptions.
Canada Responds – Prime Minister Trudeau called the tariffs “unjustified” and announced retaliatory duties on U.S. goods.
Mexico Holds Firm – President Sheinbaum vowed to unite Mexico against economic pressure.
Business Backlash – Ford and Walmart warn that tariffs will raise prices for American consumers.
Democrats Slam Trump – Schumer and Klobuchar argue the move worsens inflation and alienates U.S. allies.
More Tariffs Coming – Trump plans “reciprocal tariffs” in April, targeting autos, chips, and pharmaceuticals.
North American Trade in Jeopardy – Tensions rise as U.S.-Mexico-Canada relations face historic strain.

Deep Look

Tariffs Set to Begin Tuesday as Markets React

President Donald Trump announced Monday that 25% tariffs on imports from Mexico and Canada would take effect Tuesday at 12:01 a.m., marking a dramatic escalation in trade tensions between the U.S. and its two largest trading partners.

Trump framed the tariffs as a necessary measure to combat fentanyl trafficking and illegal immigration, but also acknowledged that the move was part of his broader effort to reduce trade imbalances and push companies to relocate factories to the U.S.

Speaking in the Roosevelt Room, Trump made his position clear:

“Tomorrow—tariffs 25% on Canada and 25% on Mexico. And that’ll start. They’re going to have to have a tariff.”

His remarks sent shockwaves through the stock market, with the S&P 500 plunging 2% in afternoon trading, reflecting fears of higher inflation, disrupted supply chains, and strained diplomatic relations.

Trump’s Trade Strategy: Tariffs as Leverage

Trump’s decision follows weeks of negotiations with both Mexico and Canada, during which he had delayed imposing tariffs in February in exchange for promised policy changes. But on Monday, he declared that there was “no room left for Mexico or for Canada” to avoid the steep new tariffs.

The tariffs include:

25% duties on most Mexican and Canadian imports
A lower 10% tariff on Canadian oil and electricity
Tariffs designed to encourage manufacturing within the U.S.

Commerce Secretary Howard Lutnick defended the move, claiming that companies are already reacting by expanding investments in the U.S. He cited TSMC, the world’s largest chipmaker, as an example, saying the firm had increased its U.S. investments in anticipation of the new tariffs.

Canada and Mexico Respond with Retaliatory Tariffs

Canada and Mexico quickly condemned the tariffs and announced countermeasures in response.

Canadian Prime Minister Justin Trudeau called Trump’s move “unjustified” and warned of economic consequences for American consumers.

“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs,” Trudeau said. “Tariffs will disrupt an incredibly successful trading relationship.”

In retaliation, Canada will impose 25% tariffs on $155 billion worth of U.S. goods, with $30 billion in tariffs taking effect immediately after midnight Tuesday.

Mexico’s President Claudia Sheinbaum, who had been waiting to hear Trump’s final decision, struck a measured but firm tone.

“This is a decision that depends on the United States government, on the United States president,” Sheinbaum said. “So whatever his decision is, we will make our decisions, and there is unity in Mexico.”

Sheinbaum’s administration has already mobilized 10,000 National Guard troops to the border to curb drug trafficking and illegal immigration, hoping to address Trump’s concerns before the tariffs were finalized.

Economic and Political Fallout

Trump’s decision is expected to have major economic consequences beyond North America.

Treasury Secretary Scott Bessent confirmed that Mexico had offered to impose 20% tariffs on Chinese imports as part of ongoing trade negotiations with the U.S.. However, Trump proceeded with tariffs anyway, signaling a hardline stance on trade policy.

Despite claims by Bessent that China would “eat” the cost of U.S. tariffs, major corporations—including Ford and Walmart—have warned about price increases and supply chain disruptions.

Multiple economic studies, including those by the Peterson Institute for International Economics and Yale’s Budget Lab, estimate that the new tariffs could cost the average U.S. household over $1,000 annually due to price hikes on imported goods.

Cornell economist Eswar Prasad described the tariffs as a “shock to businesses,” warning of rising inflation and disrupted supply chains.

“There are going to be inflationary impacts that are going to be disruptive,” Prasad said. “Companies will struggle to conduct their business operations effectively.”

Democratic Backlash: Tariffs Will Worsen Inflation

Democrats quickly condemned Trump’s tariff escalation, accusing him of alienating U.S. allies and increasing costs for American consumers.

Senate Democratic Leader Chuck Schumer (D-NY) blasted the move, saying:

“Voters last year were primarily upset about inflation. And now Donald Trump is making it worse.”

Sen. Amy Klobuchar (D-MN) highlighted the impact on U.S. farmers, noting that tariffs on Canadian goods could increase fertilizer costs for agriculture.

“This is a crazy way to handle our allies,” Klobuchar said. “He’s literally reaching out to Russia at the same time that he’s putting a 25% tariff on Canadian goods.”

What’s Next? More Tariffs on the Horizon

Trump’s tariff campaign is far from over. In April, the administration plans to roll out “reciprocal” tariffs, matching the tax rates, subsidies, and VAT charges imposed by other countries.

Additionally, Trump has revoked exemptions from his 2018 tariffs, reinstating duties on steel, aluminum, autos, computer chips, copper, and pharmaceutical drugs.

With North American trade relations now under strain, the coming weeks will determine whether Mexico and Canada negotiate further concessions or stand firm in their retaliatory measures.

Key Takeaways:

Trump’s 25% tariffs on Mexico and Canada begin Tuesday at 12:01 a.m.
Markets react negatively, with the S&P 500 dropping 2%.
Canada and Mexico announce retaliatory tariffs on U.S. goods.
Experts warn of increased inflation and supply chain disruptions.
Democrats criticize the move for worsening economic pressures.
More tariffs expected in April as Trump rolls out “reciprocal” trade policies.

As tensions escalate between the U.S., Canada, and Mexico, the global economy faces new uncertainties—with American consumers and businesses bracing for the impact.