US tariffs on Canada and Mexico to go ahead as Trump says 'no room left' for negotiation
3 March 2025, 22:25
US tariffs on Canada and Mexico will go ahead on Tuesday after Donald Trump said there was "no room left" for negotiation.
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Trump has said the tariffs are intended to force the two US neighbours to step up their fight against fentanyl trafficking and stop illegal immigration.
But he has also indicated that he wants to even the trade imbalance with both countries as well and push more factories to relocate in the US.
"Tomorrow - tariffs 25 per cent on Canada and 25 per cent on Mexico. And that'll start," Trump told reporters in the Roosevelt Room.
"They're going to have to have a tariff."
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Trump's comments quickly rattled the US stock market, with the S&P 500 index down 2 per cent in Monday afternoon trading.
It is a sign of the political and economic risks that Trump feels compelled to take, given the possibility of higher inflation and the possible demise of a decades-long trade partnership with Mexico and Canada.
Yet the Trump administration remains confident that tariffs are the best choice to boost US manufacturing and attract foreign investment.
Trump provided a one-month delay in February as both Mexico and Canada promised concessions.
But Trump said on Monday that there was "no room left for Mexico or for Canada" to avoid the steep new tariffs, which were also set to tax Canadian energy products such as oil and electricity at a lower 10% rate.
"If Trump is imposing tariffs, we are ready," said Canadian foreign minister Melanie Joly.
"We are ready with 155 billion dollars worth of tariffs and we're ready with the first tranche of tariffs, which is 30 billion dollars."
Ms Joly said Canada has a very strong border plan and explained that to Trump administration officials last week. She said the diplomatic efforts are continuing.
Mexican President Claudia Sheinbaum went into Monday waiting to see what Trump would say.
"It's a decision that depends on the United States government, on the United States president," Ms Sheinbaum said ahead of Trump's statement.
"So whatever his decision is, we will make our decisions and there is a plan, there is unity in Mexico."
Both countries have tried to show action in response to Trump's concerns.
Mexico sent 10,000 National Guard troops to their shared border to crack down on drug trafficking and illegal immigration.
Canada named a fentanyl czar, even though smuggling of the drug from Canada into the US appears to be relatively modest.
As late as Sunday, it remained unclear what choice Trump would make on tariff rates.
Companies ranging from Ford to Walmart have warned about the negative impact that tariffs could create for their businesses.
Trump also plans to roll out what he calls "reciprocal" tariffs on April that would match the rate charged by other countries, including any subsidies and and value added taxes charged by those countries.
The US president has already announced the removal of exemptions from his 2018 tariffs on steel and aluminium, in addition to tariffs on autos, computer chips, copper and pharmaceutical drugs.