Washington:
US President Donald Trump said on Monday that 25% rates on goods from Mexico and Canada will come into effect on Tuesday, create the fear of a trade war in North America and sending financial markets.
Trump’s comments sent us shares sharply in the late afternoon trade. The Mexican peso and the Canadian dollar both fell after his comments.
“They will have to have a rate. So what they have to do is to build their car factories, to be honest, and other things in the United States, in which case they have no rates,” Trump said in the White House.
He said that there was “no room left” for a deal that would turn away the rates by curb fentanyl streams in the United States.
Trump also said that mutual rates would come into effect on 2 April on countries that impose tasks on American products. He also confirmed that he will increase rates for all Chinese input to 20% compared to the previous 10% tax to punish Beijing for continuous shipments from Fentanyl to the US
Trump said that China “did not take enough steps to alleviate the illegal drug crisis.”
CEOs and economists say that Trump’s rates on Canada and Mexico, which cover more than $ 900 billion in annual American imports, would make a serious setback for the highly integrated North American economy.
The rates are planned to come into effect on Tuesday at 12:01 pm Est (0501 GMT), confirmed the Trump administration. At that time, Canada and Mexico are confronted with rates of 25%, with 10% for Canadian energy. Mexican officials did not immediately respond to requests for comments.
The Canadian Foreign Minister Melanie Joly told reporters that Ottawa was ready to respond. “There is a level of unpredictability and chaos that comes from the Oval Office, and we will have to do with it,” she said.
The industrial average of Dow Jones fell by 649.67 points, or 1.48%, the S&P 500 lost 104.78 points, or 1.76%, and the Nasdaq composite fell 497.09 points or 2.64%.
Automaker -with General Motors, which has a considerable truck production in Mexico, a decrease of 4% and Ford fell by 1.7%.
Gustavo Flores-Macias, professor of public policy at Cornell University, said that consumers could see price increases within a few days.
“The automotive sector in particular will probably see considerable negative consequences, not only because of the disruption of the supply chains that cross the three countries in the production process, but also because of the expected increase in the price of vehicles that can dampen the demand,” said Flores-Macias.
Mexico’s reaction plans
Mexico, after avoiding the first round of Trump’s rates by closing a last-minute deal to send thousands of troops to the northern border, has increased the anti-drug efforts and suggested new measures on imported Chinese goods.
President Claudia Sheinbaum said in a press conference on Monday before Trump made his comments, said her government was calm because it would be the decision of Trump, but that Mexico would respond if the rates were imposed.
“We have a plan B, C, D,” said Sheinbaum, without giving any details. She added that coordination with the US on trade and fentanyl trade has been ‘very good’.
According to the Centers for Disease Control and Prevention, 72,776 people died in 2023 of synthetic opioids in the US, mainly from Fentanyl.
Representative Suzan Delbene, a democrat from the state of Washington, said that the decision to continue with rates in Canada and Mexico would cost thousands of dollars in the supermarket, gas station and pharmacy desk.
“No president may be able to levy taxes without votes in the congress,” she said in a statement.
Trade advisor Peter Navarro of the White House, however, told CNBC on Monday that the inflationary impact of any rates would be small ‘second order, so I do not see that the president is faltering, because he knows to achieve a world in which America is strong and prosperous, with real wages that go up and (more) factory assignments. This is the path he has been chosen. “
On Saturday, Trump added a trade action to a cascade of tariff announcements in the past month, which opened a national security study into the import of wood and wood products that can lead to steep rates. Canada, already confronted with 14.5% American rates on softwood wood, would be struck particularly hard.
During the previous week, Trump ordered the revival of a tariff probe on countries that levy tax on digital services, proposed reimbursements of up to $ 1.5 million each time a Chinese built ship enters an American port and launched a new tariff study into copper import.
In addition to his plans, these come to determine higher American “mutual rates” to match the tariff rates of other countries and to compensate for their other trade barriers, a movement that could hit the European Union hard on the value of added value that is taxed by the EU countries.
But Trump’s “rates on steroids” agenda can keep inflation higher and give the world economy in a recession, Desmond Lachman, a senior fellow with the conservative American Enterprise Institute.
(Except for the headline, this story was not edited by NDTV staff and has been published from a syndicated feed.)