US tariffs on Mexico’s Canada will be in effect. China will collect double

President Donald Trump’s long-awaited tariffs have been in effect in Canada and Mexico, with the US taxed on China.

From March 4th, goods imported from North American neighbours will be slapped at 25% tariffs, the president confirmed.

Last year, the US economy imported about $1 trillion worth of goods from two top US trading partners.

Hope for a last-minute pivot was shattered when the president wrote to the press at the White House event on March 3rd that “there are no rooms left in Mexico or Canada.”

“So they’re going to have to have tariffs,” Trump said. “All (the tariffs) are set. They will come into effect tomorrow.”

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He referenced the lives lost to the “huge amounts of fentanyl” that flowed into the United States as justification for the latest trade measures.

“It’s from Canada, it’s from Mexico, it’s important to say,” the president said.

In an interview with CNN on March 3, Commerce Secretary Howard Lutnick praised the work Canada and Mexico have done to curb the flow of illegal immigration, but urged both countries more to stop the movement of fentanyl coming to the US.

“He knows they did a good job at the border. They haven’t done enough with fentanyl,” Ratnick said.

Meanwhile, the administration has not informed that it will approve more exemptions or exceptions for new tariffs, in addition to the Canadian oil and gas industry, which is facing a 10% tariff percentage.

Trump said manufacturers can avoid paying tariffs by building “automobile plants, frankly, other things in the United States.”

He further hinted at his mutual tariff plans, indicating that more tariffs were on the horizon. This initiative will raise US tariff charges to match levels established by other countries. However, it also goes beyond import operations by focusing on regulations and other non-tariff trade barriers.

“Mutual tariffs will begin on April 2nd,” the president said.

Canadian officials respond

Canadian officials responded to the news immediately.

Foreign Minister Melanie Jolly confirmed that the federal government is ready to launch the retaliation obligations outlined by Prime Minister Justin Trudeau in February.

The first set includes 25% tariffs on more than $20 billion in US goods, including coffee, orange juice, and wine. The second round will involve additional taxation on approximately $86 billion in products, including cars, trucks, steel and aluminum.

“This is an existential threat to us, and there are thousands of jobs in Canada,” Jolie said. “If the US decides to start a trade war, we are ready. We are not looking for this. We are not asking for this.”

Newly elected Ontario Premier Doug Ford threatened to cut off electricity moving from his province to several US provinces.

Ontario is a substantial electricity exporter to Michigan, Minnesota and New York.

The state will also remove US alcohol from the shelf and cancel all contracts with Starlink, Elon Musk’s Satellite Internet Company said.

Before Trump’s tariffs came into effect, Canadian central banks, business groups and bank economists warned of the important impact these trade measures had on the Canadian economy.

Bank of Canada chief Tif McClem warned that the country would withstand “structural change” as widespread tariffs “wipe away growth.”

“Exports to the US account for about a quarter of our national income, so we’ll be shocked across Canada.”

Energy-rich Alberta has been the most affected since exporting crude oil, natural gas, agricultural products and other major products to the US. New Brunswick is also the country’s largest crude oil refinery, and is devastated as it exports processed oil per day to the south of the border.

Several cities in southwestern Ontario will experience considerable economic pain. Brantford, Guelph, Hamilton, Kitchener and Windsor make billions of dollars in bilateral trade in automobiles and automotive parts, steel, machinery, equipment and other advanced manufacturing industries.

Matthew Holmes, head of public policy at the Canadian Chamber of Commerce, says Canada and the United States have a “long road” to revive the economic partnership in the future.

The Blue Chip Dow Jones Industrial Average fell sharply to 43,191.24, with 649.67 points (1.48%). The Tech Heavy Nasdaq Composite Index saw a decline of 497.09 points (2.64%) to 18,350.19. The S&P 500 reached 104.78 points (1.76%) to 5,849.72.

Chris Zaccarelli, CIO at Northlight Asset Management, said investors have mainly shrugged their president’s tariff talks and have realized that it is more than a Trump 2.0 negotiation tactic.

“The attention we’ve allegedly argued all year round has been neglected by the market, but it’s no surprise that it’s happening today. These tariffs were often telegraphed, but investors didn’t believe Trump was serious.

He believes there could be more negative side risk in the stock market as traders begin to price the economic impact of potential tariff fuels.

Tariffs may not support the economy as they are currently structured, but Mark Malek, CIO at Siebert Financial, believes that eroding consumer trust could become more of a problem.

“It leads to a decline in confidence and leads to lower GDP growth or negative growth,” Malek said in an emailed note to the Epoch Times.

“Remember, confident consumers will consume, and consumption will drive economic growth.”

Despite the recession talk returning to Wall Street, ITR economics analysts do not believe the US is heading towards a trade-driven recession.