In a move that has sent shockwaves through global markets, US President Donald Trump announced on Monday that 25% tariffs on imports from Canada and Mexico would be implemented starting Tuesday. The decision aims to pressure both countries to intensify efforts in combating fentanyl trafficking and curbing illegal immigration.
Trump’s Bold Announcement
Addressing reporters in the Roosevelt Room of the White House, Trump declared, “Tomorrow — tariffs 25% on Canada and 25% on Mexico. And that’ll start. They’re going to have to have a tariff.” The announcement came after a one-month pause to allow room for diplomatic engagement with both nations, but Trump’s administration believes insufficient progress was made.
The tariffs are expected to significantly impact trade relationships between the United States and its two largest trading partners, potentially triggering retaliatory measures from both Canada and Mexico.
Market Reaction
The announcement had an immediate effect on the US stock market, with the S&P 500 index falling by 2% during Monday afternoon trading. Analysts warned that the tariffs could lead to higher inflation for American consumers, further straining economic relations in North America.
Commerce Secretary Howard Lutnick acknowledged the uncertainty surrounding the tariff rates, stating that the final decision was still being negotiated. “He’s sort of thinking about right now how exactly he wants to play it with Mexico and Canada. And that is a fluid situation,” Lutnick told Fox News.
Canada and Mexico’s Response
Canadian Foreign Minister Melanie Joly swiftly responded, stating that Canada is prepared to retaliate with tariffs worth $155 billion. “If Trump is imposing tariffs, we are ready. We are ready with $155 billion worth of tariffs, and we’re ready with the first tranche of tariffs, which is $30 billion,” Joly asserted.
Canada has also proposed a robust border plan to address US concerns on illegal immigration and fentanyl trafficking. Prime Minister Justin Trudeau emphasized that less than one per cent of fentanyl and undocumented migrants entering the US come through Canada.
Meanwhile, Mexico’s President Claudia Sheinbaum voiced unity among Mexicans in the face of Trump’s tariff threats. “It’s a decision that depends on the United States government, on the United States president. So whatever his decision is, we will make our decisions, and there is a plan; there is unity in Mexico,” she said.
Diplomatic Uncertainty
Despite last-minute diplomatic efforts, the tariffs appear set to take effect, further straining relations between the US, Canada, and Mexico. The ongoing trade dispute is likely to have wide-reaching economic and political ramifications across North America.
As the situation develops, the world will be closely watching how these escalating tensions impact the global economy and whether a resolution can be reached through continued negotiations.