When the clock struck 0:01 on 4.3 US time, Mr. Trump's new tax rate will officially take effect, raising concerns about a full-scale trade war between the three North American neighboring countries, while causing the financial market to plummet.
Immediately after Mr. Trump's statement on March 3, the US stock market was on fire. The Dow Jones index fell 649.67 points, equivalent to a decrease of 1.48%. The S&P 500 lost 104.78 points (-1.76%). Nasdaq composite fell freely by 497.09 points (-2.64%).
auto manufacturers were hit hardest, with major Mexico supply chains such as General Motors cutting 4% and Ford cut 1.7%. The Mexico peso and the Canadian dollar also weakened immediately ahead of this tense development.
Speaking at the White House, Trump affirmed that Mexico and Canada have no more opportunities to negotiate to avoid taxes, unless they control the fentanyl flow into the US.
"They will have to pay taxes. If they want to avoid it, they need to build a factory in the US," Trump said.
He also reaffirmed that from April 2, the US will impose back-to-back tariffs on countries that tax US goods, and increase import tariffs on China to 20% to punish Beijing for exporting fentanyl to the US.
According to the US Centers for Disease Control and Prevention (CDC), in 2023, 72,776 Americans died from fentanyl, most of whom originated from China. Mr. Trump accused Beijing of "not taking strong enough action to address this drug crisis".
The Canadian government has said it is ready to respond. "There is too much chaos and unpredictability from the White House," said Canadian Foreign Minister Melanie Joly. We are prepared to deal with it."
Mexico, the largest US auto importer, is not left unused. President Claudia Sheinbaum affirmed that Mexico has plans B, C, D to deal with Mr. Trumps tax blow. Although she did not disclose details, she emphasized that coordination between Mexico and the US on trade and control of fentanyl is still "very good".
CEOs and experts warn that Mr. Trump's move could cause serious losses to the North American economy, where the supply chain between the three countries has been tightly integrated for decades.
"The auto industry will suffer the biggest consequences," said Gustavo Flores-Macias, professor of public policy at Cornell University. The disruption of the three countries' supply chains will push up car prices sharply, reducing consumer demand".
In addition, a 10% tax on the Canadian energy industry could also spike fuel prices in the US.
Representative Suzan DelBene, Washington, criticized: "No president should have the right to unilaterally impose a tax without the approval of Congress. This will cost American families big from supermarkets to gas stations.
The decision to impose tariffs on Canada and Mexico is just part of President Trump's series of drastic trade moves over the past month. He has launched a national security investigation into imported timber, which could lead to a high tax rate on soft timber from Canada, which is already subject to a 14.5% tax.
He considered taxing countries that apply digital service tax, especially targeting Europe.
Another move is to propose a fee of $1.5 million for each Chinese ship docking in the US port, launching a tariff investigation into copper imports.
President Trump also stressed that the US will impose a " let it go back" tax rate to balance with the tax rates that other countries impose on US goods. This move could seriously affect the European Union (EU), which has high value-added tax rates on US goods.
