Trump hits Canada, Mexico and China with new tariffs: markets reacted with a decline.

US President Donald Trump announced his intention to impose new tariffs on imports from Canada and Mexico and also double the tariffs on Chinese goods. These measures, which will take effect tomorrow, March 4, will become serious trade barriers.

«There is no room left for Mexico or Canada,» Trump said. «They take effect tomorrow.»

Trump also signed an order to double the tariff on Chinese imports to 20%, which will take effect at noon Washington Time. It was noted that Beijing has not taken sufficient steps to address the flow of illegal fentanyl into the US.

Impact on the markets

Trump's statements triggered a sell-off on the US stock markets. The Dow Jones Industrial Average and the S&P 500 fell about 2% during the day. The president's words disappointed people and deprived them of hope for avoiding a full-scale trade war.

Canada is preparing its own tariffs, and Trump plans next round of tariffs on steel and aluminum next week.

Economic consequences

The imposed tariffs will become the most extensive during Trump's time and will subject 1.5 trillion dollars of annual imports to taxation. Tariffs on all imports from Canada and Mexico will amount to 25%, except for Canadian energy sources, which will be taxed at 10%.

«Tariffs are simple, quick, efficient, and fair,» Trump said. «It will be very expensive for those trying to take advantage of this country. They cannot come here and steal our money, jobs, factories, and businesses and not be punished with rightful tariffs.»

Response from trade partners

Mexican President Claudia Sheinbaum stated that her government will await Trump's final decision before taking appropriate measures.

Canada is also planning to impose its tariffs on American goods worth 20.6 billion dollars, including orange juice, peanut butter, wine, coffee, as well as tariffs on cars, trucks, steel, and aluminum in several weeks.

Beijing is considering taking measures against American agricultural and food products in response to Trump's tariffs, according to the news outlet Global Times, which is sometimes used to reflect China's positions to the outside world.

Economic risks

New tariffs may provide revenue to those receiving tax cuts that Trump plans and strengthen the position of those who view his threats as mere bluffs in negotiations.

But they may also lead to rising inflation, jeopardize North American supply chains, especially in the automotive industry, and create problems regarding the fulfillment of the continental free trade agreement, which Trump has been revising since the beginning of his term.

Trump's plans may also worsen the US economy, which is already experiencing strain. Stocks and cryptocurrencies have fallen from record levels, consumer sentiment has sharply decreased, and inflation continues to rise. The new tariff war threatens to lead to larger sell-offs.