President Donald Trump said that on Tuesday he will impose 25% tariffs on goods imported from Canada and Mexico, dashing hopes for a last-minute deal that could avoid a trade war with two of the U.S.' top trading partners.
Trump told reporters there was "no room left for Mexico or for Canada" to negotiate an alternative to the tariffs, which he has threatened to impose for weeks.
"They're all set. They go into effect tomorrow," the president said at a White House event Monday.
Stock prices plunged after Trump spoke. The S&P 500 fell 1.76%, its worst day since December, putting the index into the red for the year to date.
Trump, as he has previously, cited the flow of the deadly opioid fentanyl into the U.S. as justification for the tariffs, apparently unsatisfied with recent efforts by Canada and Mexico to strengthen law enforcement at their respective borders.
"Just so you understand, vast amounts of fentanyl have poured into our country from Mexico, and as you know, also from China, where it goes to Mexico and goes to Canada," the president said.
In addition to announcing that the tariffs on the two U.S. neighbors would go forward Tuesday, Trump on Monday imposed an additional 10% tariff on Chinese imports, doubling the 10% duty he had slapped on Beijing in early February.
Tariffs are essentially taxes on foreign goods that are paid by the importers.
Because of that, critics warn that the Trump tariffs ultimately will lead to higher prices for U.S. consumers.
But they remain Trump's favorite way to flex America's muscle against its adversaries and allies alike.
Canadian Prime Minister Justin Trudeau has said his country will impose retaliatory tariffs if Trump follows through on his threats.
Ottawa in February said it was prepared to slap 25% tariffs on $155 billion worth of U.S. goods, and readied an opening salvo that targeted goods produced in Republican-led states.
China announced retaliatory measures against the U.S. in February, when Trump's first round of 10% tariffs against Beijing took hold. China has vowed additional countermeasures to address Trump's latest round of tariffs.
Since taking office for a nonconsecutive second term, Trump has imposed a 25% duty on all U.S. imports of steel and aluminum, in addition to tariffs on Chinese imports.
He has also unveiled a plan to enact "reciprocal tariffs" on other countries that impose tariffs on imports from the U.S.
Trump's comments Monday came during an event touting a $100 billion investment in the U.S. by Taiwan Semiconductor Manufacturing.
Trump said that by planning to build new chip fabrication plants in Arizona, the company will avoid getting hit with import tariffs.
He admonished Canada and Mexico to do the same.
"What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs," Trump said.
The tariffs set to take effect Tuesday on Canada and Mexico were first ordered by Trump in an executive order Feb. 1.
But he postponed those tariffs for a month after those countries on Feb. 3 pledged to take steps toward preventing the trafficking of fentanyl across their borders into the U.S.
Mexico said it would send 10,000 soldiers to the U.S. border to combat drug trafficking operations. And on Thursday, Mexico extradited 29 drug cartel members to the U.S.
But Trump last week said the tariffs would take effect Tuesday after complaining that illicit drugs are still "pouring into our Country from Mexico and Canada at very high and unacceptable levels."
However, doubts remained that Trump would follow through on his threat.
Earlier Monday, Commerce Secretary Howard Lutnick suggested that Trump might soften his tariff demands.
"He knows they've done a good job on the border," Lutnick said in a CNN interview.
"They haven't done enough on fentanyl. Let's see how the president weighs that today," Lutnick said. "We're going to talk about it all day today, and then he'll let everybody know tomorrow with the plans."
Canada has emphasized that the amount of fentanyl that travels into the U.S. from the northern border is just a small fraction of what comes in through Mexico.
About 21,148 pounds of fentanyl were seized at the U.S. southwest border in fiscal year 2024, versus 43 pounds seized from the Canadian border in the same period, according to U.S. Customs and Border Protection.
— CNBC's Megan Cassella contributed to this report.
