U.S. tariffs on Mexico and Canada go into effect and levies on China raised
Washington — The United States imposed 25% tariffs on nearly all goods imported from Mexico and Canada Tuesday, after taking a month for aides to negotiate a potential reprieve. Duties of 10% were put in place on Canadian energy products.
The tariffs went into effect at 12:01 a.m., hours before President Trump's first address to a joint session of Congress of his second term.
The U.S. also imposed 10% tariffs on imports from China on top of those already in place, bringing them to 20%.
The tariffs come as more U.S. households are showing signs of economic strain, with retailers such as Target and Walmart recently warning that inflation-weary consumers are cutting back on spending. Mr. Trump's tariffs could push up prices on everything from avocados imported from Mexico to gasoline prices, potentially undermining the president's pledge to eradicate inflation.
"Everything from cars to agricultural products will see cost surges, exacerbating inflationary pressures that had only recently shown signs of easing," said Nigel Green, the CEO of investment advisory firm de Vere Group, in an email.
Stocks tumbled on Monday after Mr. Trump said the tariffs would move forward on March 4, with the S&P 500 shedding 1.8%, marking its biggest one-day decline so far this year. Wall Street continued the sell-off on Tuesday, with the S&P 500 and tech-heavy Nasdaq composite both losing 1.7% in early morning trading. The Dow Jones Industrial Average slumped 1.5%.
China, Canada and Mexico react
China responded immediately, announcing it would put additional tariffs of up to 15% on imports of key U.S. farm products, including chicken, pork, soy and beef. They're slated to take effect March 10. China also imposed export controls and other curbs on about two dozen more U.S. companies.
What's more, foreign ministry spokesman Lin Jian said, "If the United States ... persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end," according to Agence France-Presse.
Canadian Prime Minister Justin Trudeau said his nation would respond with 25% tariffs on some $107 billion worth of U.S. goods over the course of three weeks — with $20.7 billion immediately — if the U.S. levies remained in effect. He had said previously that Canada would target American beer, wine, bourbon and home appliances and Florida orange juice.
"Tariffs will disrupt an incredibly successful trading relationship," the Reuters news agency quoted Trudeau as saying.
Ontario Premier Doug Ford told NBC News he was prepared to retaliate by ending shipments of nickel and the transmission of electricity to the U.S. from his province.
Mexico President Claudia Sheinbaum said Tuesday that Mexico will respond with its own retaliatory tariffs on U.S. goods. Sheinbaum said she will announce the products Mexico will target on Sunday in a public event in Mexico City's central plaza, perhaps indicating Mexico still hopes to de-escalate the trade war set off by U.S. President Donald Trump.
Did Canada have tariffs on U.S. products before?
Canada had imposed some limited tariffs on U.S. products before 2025, and vice versa. Under the U.S.-Mexico-Canada (USMCA) trade agreement, which was signed by President Trump in 2020, the countries had negotiated a complex set of rules aimed at promoting trade.
One of the biggest changes in the USMCA pact was providing American farmers greater access to Canada's dairy markets. That included a plan eliminating existing Canadian-imposed tariffs on some U.S. dairy products over a number of years, including whey and margarine.
The U.S. has also previously imposed tariffs on some Canadian products, including duties placed by the first Trump administration on imported softwood lumber. Under the Biden administration, the tariffs on Canadian lumber rose from 8% to 14.5% in 2024.
Impact on markets, consumers
Economists warn that the new tariffs could lead to higher prices for American consumers and a trade war among major U.S. trading partners.
Investors reacted negatively to Monday's news that the tariffs on Mexico and Canada would take effect as planned, with the stock market slumping on Monday and Tuesday. Trade war fears sent markets falling in Asia and Europe, as well on Tuesday.
"The market finally took the Trump administration at its word, and the realization that the tariff talk wasn't just a negotiating tactic is starting to sink in," said Chris Zaccarelli, chief investment officer for Northlight Asset Management, in an email. "The sell-off that we are beginning to see has room to run (to the downside) as long as the tariff threats remain more than idle talk."
On Monday, a reporter asked Mr. Trump if there was room left for Canada and Mexico to arrive at a deal before the deadline.
"No room left for Mexico or for Canada, no," Mr. Trump responded. "The tariffs, they're all set, they go into effect tomorrow."
He has wielded tariffs as an instrument to extract concessions from foreign governments and encourage manufacturing in the U.S.
"It's a very powerful weapon that politicians haven't used because they were either dishonest, stupid, or paid off in some other form," he said at the White House Monday after announcing a $100 billion investment by a Taiwanese semiconductor company. "And now we're using them."
The tariffs are in response to what Mr. Trump views as Mexico and Canada's irresponsible handling of the southern and northern borders, including fentanyl entering the United States. Both countries won last-minute delays on the tariffs in February after Sheinbaum and Trudeau vowed to do more to crack down on fentanyl and illegal border crossings.
