Updated March 04, 2025 at 11:48 AM ET
China and Canada announced retaliatory measures on Tuesday after U.S. tariffs took effect overnight, escalating trade tensions and rattling global markets.
President Trump's new tariffs include a 25% levy on most imports from Canada and Mexico, with an additional 10% tariff on Canadian energy exports. Tariffs on Chinese goods were increased from 10% to 20%.
Beijing responded by slapping additional tariffs of 10%-15% on a variety of U.S. agricultural imports, including chicken, pork, soy and beef, starting next week, China's finance ministry announced.
Canadian Prime Minister Justin Trudeau, meanwhile, said Ottawa would impose immediate 25% tariffs on more than $20 billion worth of U.S. imports. Tariffs on an additional $86 billion worth of products will take effect in 21 days.
"Our tariffs will remain in place until the U.S. trade action is withdrawn," Trudeau said, adding that his government was looking into nontariff measures if the U.S. did not reverse course.
Mexican President Claudia Sheinbaum denounced the new measures, saying they lacked reason or justification. Allowing time for dialogue, Sheinbaum said she would wait to announce retaliatory measures until Sunday. She called on all the Mexican people to show up to the country's main square for her speech.
Trump defended the tariffs, arguing that they would punish Canada and Mexico — the two largest trade partners to the U.S. — for fentanyl trafficking. He also said the move would encourage car manufacturers and other businesses to move their production to the United States.
"I would just say this to people in Canada or Mexico: if they're going to build car plants, the people that are doing them are much better off building here, because we have the market where they sell the most," Trump told reporters at the White House.
Trudeau on Monday said fentanyl seizures at the U.S. northern border have dropped to "near-zero." Trump has continued to describe fentanyl overdoses as an escalating crisis in the U.S., despite the fact that fatal overdoses have plummeted since 2023 — down nearly 24%, according to the latest data from the Centers for Disease Control and Prevention.
Markets drop amid fears of a trade war
Asian markets tumbled shortly after the tariffs took effect. Japan's Nikkei index dropped by more than 2%, while Hong Kong's Hang Seng was down by 1.5%.
On Wall Street, U.S. stocks plummeted on Tuesday.
The market slides follow weeks of speculation over whether Trump would follow through with the tariffs. Trump had originally said the tariffs would begin on Feb. 1, but then gave leaders of the two countries a month to show they were curbing illegal immigration into the United States as well as drug trafficking.
Last week, he briefly said he would put off the tariffs until April 2 — then a day later, said that March 4 was the deadline.
"We need to see material reduction in autopsy deaths from opioids," Commerce Secretary Howard Lutnick told CNBC on Tuesday.
Lutnick said that April 2 would be a "reset" in trade relations, apart from the opioid concerns.
"Canada and Mexico had an invitation to trade with an amazing economy of the United States of America, and they have abused that invitation."
Trump said there was no wiggle room left for talks
During an event with Taiwan Semiconductor Manufacturing Co. (TSMC) Chief Executive C.C. Wei at the White House on Monday, Trump said the 25% tariffs would go ahead.
Asked whether there was any wiggle room for the two countries to negotiate the rate, Trump said: "No room left for Mexico or for Canada."
"The tariffs, they're all set, they take effect tomorrow," he said.
NPR's Eyder Peralta contributed to this report.
Copyright 2025 NPR
