US decides to impose tariffs on Canadian and Mexican goods, stocks immediately plummet

The decision has sparked fears of a trade war in North America and has had a negative impact on financial markets.

In a speech at the White House on March 3, Mr. Trump emphasized that there was no longer any possibility of negotiating to avoid the imposition of tariffs, even if the two neighboring countries made a commitment to limit the flow of fentanyl into the U.S. The applicable tariff would be 25% for most goods, except for energy from Canada subject to a 10% tariff.

The announcement sent shockwaves through the U.S. stock market, with major indexes falling significantly. The S&P 500 fell 1.75%, the Nasdaq Composite lost 2.64%, and the Dow Jones fell 1.47%. Auto stocks were hit hard, with General Motors down 4% and Ford down 1.7%. The U.S. dollar also rose against the Mexican peso and Canadian dollar.

Economists warn the move, which affects more than $900 billion worth of imports annually, could severely damage the deeply integrated North American economy.

Speaking on CNN, US Commerce Secretary Howard Lutnick said both Canada and Mexico have made progress on border security, but more needs to be done to limit the flow of fentanyl into the US to reduce the number of deaths from this addictive drug.

President Trump also said reciprocal tariffs would take effect on April 2 for countries that impose tariffs on US exports. At the same time, Trump also plans to increase fentanyl-related tariffs on imports from China from 10% to 20% on March 4, unless Beijing takes drastic action to end the flow of fentanyl into the US.

Secretary Lutnick did not mention any potential changes to those tariffs, which would affect about $439 billion worth of annual imports.