In a joint statement issued after a meeting on the war, the leaders of the global institutions said the burden would fall most heavily on the world’s most vulnerable populations, particularly in low-income, import-dependent economies.

They said their institutions would continue to monitor developments closely and “coordinate the use of all available tools to support those impacted by the crisis.”

Increases in oil, gas, fertilizer prices

U.S. President Donald Trump on Tuesday announced a two-week ceasefire deal between the United States and Iran, but relief over the truce quickly gave way to alarm that fighting was still raging across the region, with Israeli strikes on Lebanon and Iranian attacks on Gulf oil facilities.

“The Middle East war is upending lives and livelihoods in the region and beyond. It has already triggered one of the largest disruptions to global energy markets in modern history,” the joint statement said.

“Sharp increases in oil, gas, and fertilizer prices, together with transport bottlenecks, will inevitably lead to rising food prices and food insecurity.”

The statement said spikes in fuel prices and potential sharp increases in food prices were especially concerning in countries already facing fiscal constraints and high debt burdens, which would limit their ability to protect vulnerable households.

Institutions vow support

The leaders of the three institutions vowed to provide support in accordance with their mandates, and to lay the foundations for a resilient recovery.

IMF Managing Director Kristalina Georgieva told Reuters on Monday the IMF was also engaging with the United Nations’ Food and Agriculture Organization on food security.

The World Food Programme said in mid-March that millions of people will face acute hunger if the war continues into June. Georgieva said the IMF did not see a food crisis yet, but that could happen if the delivery of fertilizers was impaired.

— Reporting by Andrea Shalal and Daphne Psaledakis

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The U.S. Customs and Border Protection agency began collecting the higher tariffs of 10 per cent to 50 per cent at today after weeks of suspense over Trump’s final tariff rates and frantic negotiations with countries seeking to lower them.

The leaders of Brazil and India vowed not to be cowed by Trump’s hardline bargaining position, even while their negotiators sought a reprieve from the highest tariff levels.

The new rates will test Trump’s strategy for shrinking U.S. trade deficits without causing massive disruptions to global supply chains or provoking higher inflation and stiff retaliation from trading partners.

‘Billions’ in tariff revenue

After unveiling his “Liberation Day” tariffs in April, Trump has frequently modified his plans, slapping much higher rates on imports from some countries, including 50 per cent for goods from Brazil, 39 per cent from Switzerland, 35 per cent from Canada and 25 per cent from India. He announced on Wednesday a separate 25 per cent tariff on Indian goods, to be imposed in 21 days, over India’s purchases of Russian oil.

“BILLIONS OF DOLLARS, LARGELY FROM COUNTRIES THAT HAVE TAKEN ADVANTAGE OF THE UNITED STATES FOR MANY YEARS, LAUGHING ALL THE WAY, WILL START FLOWING INTO THE USA,” Trump said on Truth Social just ahead of the tariff deadline.

Tariffs are ultimately paid by companies importing the goods, and passed on in full or in part to consumers of end products.

Trump’s top trade negotiator, Jamieson Greer, said the U.S. was working to reverse decades of policies that had weakened U.S. manufacturing capacity and workforce, and that many other countries shared concerns about macroeconomic imbalances.

“The rules of international trade cannot be a suicide pact,” he wrote in a column published by the New York Times.

“By imposing tariffs to rebalance the trade deficit and negotiating significant reforms that form the basis of a new international system, the United States has shown bold leadership,” Greer said.

A new equilibrium

Eight major trading partners accounting for about 40 per cent of U.S. trade flows have reached framework deals for trade and investment concessions to Trump, including the European Union, Japan and South Korea, reducing their base tariff rates to 15 per cent.

Britain won a 10 per cent rate, while Vietnam, Indonesia, Pakistan and the Philippines secured rate reductions to 19 per cent or 20 per cent.

“There’ll be some supply chain rearrangement. There’ll be a new equilibrium. Prices here will go up, but it’ll take a while for that to show up in a major way,” said William Reinsch, a senior fellow and trade expert at the Center for Strategic and International Studies in Washington.

Countries with punishingly high duties, such as India and Canada, “will continue to scramble around trying to fix this,” he added.

Switzerland’s government was to hold an emergency meeting on Thursday after President Karin Keller-Sutter returned home empty-handed from an 11th-hour trip to Washington aimed at averting the crippling U.S. import tariff on Swiss goods.

Brazil, India defiant

A last-minute attempt by South Africa to improve its offer in exchange for a lower tariff rate also failed. The two countries’ trade negotiating teams will have more talks, South African President Cyril Ramaphosa’s office said.

Vietnam said on Thursday it will continue talks with the U.S. as it seeks to lower tariffs further still after negotiating a reduction to 20 per cent from the 46 per cent duty Trump slapped on the Southeast Asian country in April.

Meanwhile, Brazil’s President Luiz Inacio Lula da Silva told Reuters on Wednesday he wouldn’t humiliate himself by seeking a phone call with Trump even as he said his government would continue cabinet-level talks to lower a 50 per cent tariff rate.

Indian Prime Minister Narendra Modi was similarly defiant, saying he would not compromise the interests of the country’s farmers.

There were also signs that some countries were rallying together to confront Trump, with Brazil’s Lula saying he would call the leaders of India and China to discuss a joint BRICS response to tariffs.

India said on Wednesday that Modi will visit China for the first time in seven years.

Revenues, price hikes

U.S. import taxes are one part of a multilayered tariff strategy that includes national security-based sectoral tariffs on semiconductors, pharmaceuticals, autos, steel, aluminum, copper, lumber and other goods. Trump said on Wednesday the microchip duties could reach 100 per cent.

China is on a separate tariff track and will face a potential tariff increase on August 12 unless Trump approves an extension of a prior truce. He has said he may impose additional tariffs over China’s purchases of Russian oil as he seeks to pressure Moscow into ending its war in Ukraine.

Trump has touted a vast increase in federal revenues from his import tax collections, with U.S. Commerce Secretary Howard Lutnick saying on Fox Business Network on Thursday that he expected revenue from tariffs to reach $50 billion a month (C$68.7 billion).

The move will drive average U.S. tariff rates to around 20 per cent, the highest in a century and up from 2.5 per cent when Trump took office in January, the Atlantic Institute estimates.

Commerce Department data released last week showed more evidence that tariffs were driving up U.S. prices, including for recreational goods and motor vehicles, while costs are mounting for companies, including bellwethers Caterpillar, Marriott, Molson Coors and Yum Brands.

Toyota on Thursday said it expected a hit of nearly $10 billion (C$13.7 billion) from tariffs on cars imported into the U.S. as it cut its full-year profit forecast by 16 per cent.

But other Japanese companies such as Sony and Honda said they now expected a smaller impact on profits after Japan agreed a bilateral deal with Washington to lower tariffs.

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The deal, announced by Trump and British Prime Minister Keir Starmer on the sidelines of the G7 Summit in Canada, reaffirmed quotas and tariff rates on British automobiles and eliminated tariffs on the U.K. aerospace sector, but the issue of steel and aluminum remains unresolved.

Other critical industries, such as pharmaceuticals, were not mentioned.

Trump said the relationship with Britain was “fantastic,” as he waved, and then briefly dropped, a document that he said he had just signed.

“We signed it and it’s done,” he said, incorrectly calling it a trade agreement with the European Union, before making clear the deal was with Britain.

Starmer called it “a very good day for both of our countries, a real sign of strength”

What’s included

The U.S. intends to impose a quota on steel and aluminum imports from the United Kingdom that would be exempt from 25 per cent tariffs, but it is conditioned upon Britain’s demonstrating security on steel supply chains and production facilities, according to an executive order released by the White House.

The quota level will be set by Commerce Secretary Howard Lutnick, the White House said.

Britain had avoided tariffs of up to 50 per cent on steel and aluminum that the U.S. imposed on other countries earlier this month, but it could have faced elevated tariffs starting July 9 unless a deal to implement the tariff reduction was reached.

The two leaders reaffirmed a plan to give British carmakers an annual quota of 100,000 cars that can be sent to the United States at a 10 per cent tariff rate, less than the 25 per cent rates other countries face.

The plan will go in effect seven days after it is published in the Federal Register, the White House said.

The agreement also eliminates tariffs on the UK aerospace industry, including parts and planes, according to the executive order.

Delayed implementation

Britain was the first country to agree on a deal for lower tariffs from Trump, with the U.S. reducing tariffs on imports of UK cars, aluminum and steel, and Britain agreeing to lower tariffs on U.S. beef and ethanol.

But implementation of the deal has been delayed while details were being hammered out and some issues remain outstanding.

Britain called the deal a huge win for its aerospace and auto sectors, noting the UK was the only country to have secured such a deal with Washington.

“Bringing trade deals into force can take several months, yet we are delivering on the first set of agreements in a matter of weeks. And we won’t stop there,” UK Trade Secretary Jonathan Reynolds said in a statement.

Reynolds said the two sides agreed to reciprocal access to 13,000 metric tons of beef, while making clear that U.S. imports would need to meet tough UK food safety standards.

He said both countries remain focused on securing “significantly preferential outcomes” for the UK pharmaceutical sector, and work would continue to protect industry from any further tariffs imposed as part of Section 232 investigations underway by the U.S. Commerce Department.

Asked if the deal protects the United Kingdom from future tariff threats, Trump responded: “The UK is very well protected. You know why? Because I like them. That’s their ultimate protection.”

— Reporting by Jarrett Renshaw, Suzanne Plunkett and Andrea Shalal

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On Wednesday, prior to Trump’s announcement, the EU said it would place duties on a range of U.S. imports from next Tuesday in response specifically to U.S. metals tariffs. The bloc was still assessing how to respond to the car and broader levies.

The U.S. imports included corn, wheat, barley, rice, motorcycles, poultry, fruit, wood, clothing and dental floss, according to a document seen by Reuters. They totaled about 21 billion euros (C$32.8 billion) last year.

“We want to give negotiations a chance,” von der Leyen said on X. “While finalizing the adoption of the EU countermeasures that saw strong support from our Member States, we will put them on hold for 90 days.”

Trump’s move was an important step towards stabilizing the global economy, von der Leyen said. But she warned that counter-tariffs could be reinstated if necessary.

“If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues,” she said, before adding: “As I have said before, all options remain on the table.”

Trump administration weighing offers

The Trump administration is weighing offers from more than a dozen countries on tariff deals and is close to reaching agreements with some of them, White House economic adviser Kevin Hassett said.

“USTR has informed us that there are maybe 15 countries now that have made explicit offers that we’re studying and considering and deciding whether they’re good enough to present the president,” Hassett told reporters at the White House, referring to the U.S. trade representative.

Principals in the administration’s trade policy will meet at the White House on Thursday to discuss how to prioritize the separate negotiations, Hassett said.

Trump’s sudden decision on Wednesday to pause most of his hefty new duties brought relief to battered markets and anxious global leaders, even as he ratcheted up a trade war with China.

His turnabout, which came less than 24 hours after steep new tariffs kicked in, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic.

U.S. stock indexes shot higher on the news, and the relief continued into Asian and European trading on Thursday.

Before Trump’s U-turn, the upheaval had erased trillions of dollars from stock markets and led to an unsettling surge in U.S. government bond yields that appeared to catch Trump’s attention.

Trump kept the pressure on China, the second-biggest provider of U.S. imports, with an increase of tariffs on Chinese imports to 125 per cent from the 104 per cent level that kicked in on Wednesday.

He also signed an executive order aimed at reducing China’s grip on the global shipping industry and at reviving U.S. shipbuilding.

Trade war with China

China rejected what it called threats and blackmail from Washington.

China will “follow through to the end” if the U.S. persists, Commerce Ministry spokesperson He Yongqian told a regular press briefing. China’s door was open to dialogue, but this must be based on mutual respect, the ministry said.

Beijing may again respond in kind after already imposing 84 per cent tariffs on U.S. imports on Wednesday to match Trump’s earlier salvo.

Trump, who claims the tariffs aim to fix U.S. trade imbalances, said a resolution with China on trade is also possible. But officials have said they will prioritize talks with other countries as Vietnam, Japan, South Korea and others line up to try and strike a bargain.

China’s yuan hit its lowest against the dollar on Thursday since the global financial crisis.

Trump’s reversal on tariffs is not absolute. A 10 per cent blanket duty on almost all U.S. imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminum.

The U.S. tariff pause does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25 per cent fentanyl-related tariffs unless they comply with the U.S.-Mexico-Canada trade agreement’s rules of origin.

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“For Canada and Mexico, the existing fentanyl/migration … orders remain in effect, and are unaffected by this order,” the White House fact sheet said.

“This means USMCA (U.S.-Mexico-Canada Agreement) compliant goods will continue to see a 0% tariff, non-USMCA compliant goods will see a 25% tariff, and non-USMCA compliant energy and potash will see a 10% tariff. In the event the existing fentanyl/migration … orders are terminated, USMCA compliant goods would continue to receive preferential treatment, while non-USMCA compliant goods would be subject to a 12% reciprocal tariff.”

Widespread 10 per cent tariffs

President Donald Trump said on Wednesday that he would impose a 10 per cent baseline tariff on all imports to the United States and higher duties on dozens of the country’s biggest trading partners.

Trading partners are expected to respond with countermeasures of their own that could lead to dramatically higher prices for everything from bicycles to wine. U.S. stock futures sank following his announcement.

“It’s our declaration of independence,” Trump said at an event in the White House Rose Garden.

Trump displayed a poster that listed reciprocal tariffs, including 34 per cent on China and 20 per cent on the European Union, as a response to duties put on U.S. goods.

A White House official, speaking on condition of anonymity, said those penalties will take effect on April 9 and will apply to about 60 countries in all.

The baseline 10 per cent tariff will take effect on Saturday, the official said.

Following his remarks, Trump signed an order to remove a “de minimis” tariff exemption on low-cost products. Trump is also planning other tariffs targeting semiconductors, pharmaceuticals, and potentially critical minerals, the official said.

Trump’s barrage of penalties has rattled financial markets and businesses that have relied on trading arrangements that have been in place since the middle of last century.

Auto tariffs to take effect

The administration has said the new tariffs will take effect immediately after Trump announces them, though it has not yet published the official notice required for enforcement.

The administration, however, did publish an official notice that a separate set of tariffs on auto imports that Trump announced last week will take effect starting on April 3.

Trump has already imposed 20 per cent duties on all imports from China and 25 per cent duties on steel and aluminum and extended them to nearly $150 billion worth of downstream products.

His advisers say the tariffs will return strategically vital manufacturing capabilities to the United States.

Outside economists have warned that tariffs could slow the global economy, raise the risk of recession, and increase living costs for the average U.S. family by thousands of dollars. Businesses have complained that Trump’s barrage of threats has made it difficult to plan their operations.

Tariff concerns have already slowed manufacturing activity across the globe, while also spurring sales of autos and other imported products as consumers rush to make purchases before prices rise.

Financial markets were volatile as investors awaited Trump’s announcement. U.S. stocks have erased nearly $5 trillion of value since February.

— Additional reporting by Kanishka Singh and Steve Holland

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Trump’s latest salvo was in response to the premier of Ontario’s announcement that he would place a 25 per cent surcharge on the electricity Canada’s most populous province supplies to 1.5 million U.S. homes unless Trump drops all of his tariff threats against the northern U.S. neighbor.

Ford later agreed to suspend the surcharge and meet with U.S. Commerce Secretary Howard Lutnick on Thursday, calling for cooler heads to prevail. Trump said he respected the move.

Why it matters: Dairy, a long-standing bone of contention in U.S-Canada trade relations, is once again in the spotlight.

In a post on his Truth Social media platform, Trump said he has instructed Commerce Secretary Howard Lutnick to add an additional 25 per cent tariff on the metals products from Canada that will go into effect on Wednesday morning. Tariffs totaling 25 per cent on all imported steel and aluminum products originating from other countries will start that day.

Trump lashes out at dairy

Trump further lashed out at Canada for trade protections it has in place on dairy and other agricultural products, and he threatened to “substantially increase” tariffs on cars coming into the U.S. that are set to take effect on April 2 “if other egregious, long time Tariffs are not likewise dropped by Canada.”

Ontario Premier Doug Ford was not cowed.

“We will not back down. We will be relentless. I apologize to the American people that President Trump decided to have an unprovoked attack on our country,” Ford told MSNBC after Trump’s announcement. About 1.5 million homes and businesses in New York state, Michigan and Minnesota are powered by the province’s utilities, and Trump said he would declare a national emergency to mobilize resources to assist the affected areas.

The latest escalation occurred at a time when there is effectively a power vacuum in Ottawa. Prime Minister Justin Trudeau is stepping down and is due to formally hand over power to his successor Mark Carney this week. Carney, who overwhelmingly won the leadership race of the ruling Liberals last weekend, told reporters on Monday he could not speak to Trump until he had formally been sworn in as prime minister.

Markets take more hits

Trump’s broadside delivered another painful jolt to financial markets, with the benchmark S&P 500 index sliding more than 1.0 per cent as investors worry the import taxes will hurt U.S. growth and rekindle inflation. The Toronto Stock Exchange’s S&P/TSX Composite index was down about 0.6 per cent and the Canadian dollar fell to a one-week low against the greenback.

Since hitting a record high about a month after Trump’s inauguration, the S&P 1500 index – among the widest measures of the U.S. stock market – has lost at least $5 trillion in value, a blow to wealth that could also stymie household spending.

Trump is set to meet later on Tuesday with about 100 chief executives of U.S. firms as evidence grows that his trade policies are posing a downside risk to the economy, threatening to dash a “soft landing” that until recently appeared as the base case and reignite inflation.

Whether any of them will be willing to raise such concerns directly with Trump is unknown. Ahead of the gathering, however, businesses ranging from airlines to department stores said his fast-shifting trade policies are starting to have a chilling effect across many industries, as consumers pull back on purchases of everything from basic goods to travel.

Shaky confidence

Broader 25 per cent levies on all steel and aluminum imported to the U.S. from anywhere are due to take effect early on Wednesday, and another round of tariffs on autos as well as tit-for-tat reciprocal tariffs are lined up for early April. Canada and China have retaliated with their own tariffs on U.S. exports, while Mexico stopped short of retaliation after Trump delayed his planned levies on the southern U.S. neighbor.

The metals tariffs will apply to millions of tons of steel and aluminum imports from Canada, Brazil, Mexico, South Korea and other countries that had been entering the U.S. on a duty-free basis under carve-outs. Trump has vowed that the tariffs will be applied “without exceptions or exemptions” in a move he hopes will aid the struggling U.S. industries.

Trump’s promise to double the metals levies on Canada sent some aluminum prices soaring. Price premiums for aluminum on the U.S. physical market climbed to a record high above $990 a metric ton (C$1,432) on Tuesday.

Trump’s hyper-focus on tariffs since taking office in January has rattled investor, consumer and business confidence in ways that economists increasingly worry could cause a recession. A small business survey on Tuesday showed sentiment weakening for a third straight month, fully eroding a confidence boost following Trump’s November 5 election victory, and a survey of households by the Federal Reserve Bank of New York on Monday showed consumers growing more pessimistic about their finances, inflation and the job market.

Reuters polls of economists last week showed risks to the Mexican, Canadian and U.S. economies are piling up amid a chaotic implementation of U.S. tariffs that has created deep uncertainties for businesses and decision-makers. The surveys showed 70 of 74 economists polled across Canada, the U.S. and Mexico judged that the risk of a recession had increased, and upside risks to inflation in the U.S. rose in particular.

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Why it matters: Canada and the U.S. are major trade partners, with agricultural goods flowing in both directions across the border.

The tariff actions, which could upend nearly $2.2 trillion in annual U.S. trade with its top three trading partners, went live at 12:01 a.m. EST (0501 GMT). Trump declared that all three countries had failed to do enough to stem the flow of the deadly fentanyl opioid and its precursor chemicals into the U.S.

Find the latest trade war updates here

China responded immediately, announcing additional tariffs of 10 to 15 per cent on certain U.S. imports from March 10 and a series of new export restrictions for designated U.S. entities. Later it said it had raised complaints about the new measures with the World Trade Organization.

Canada and Mexico, which have enjoyed a virtually tariff-free trading relationship with the U.S. for three decades, were poised to immediately retaliate.

Canadian Prime Minister Justin Trudeau said Ottawa was launching 25 per cent tariffs on C$30 billion (US$20.7 billion) worth of U.S. imports, including orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.

Trudeau said Canada would slap tariffs on another C$125 billion of U.S. imports if Trump’s tariffs were still in place in 21 days. Consultation over these produce were still taking place, but they are expected to include vehicles, steel, aircraft, fruits and vegetables, beef and pork.

“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they would violate the U.S.-Mexico-Canada free trade agreement signed by Trump during his first term.

Ontario Premier Doug Ford told NBC that he was ready to cut off shipments of nickel and transmission of electricity from his province to the U.S.

Mexican President Claudia Sheinbaum said on Tuesday there was “no reason, rationale or justification” for Trump’s actions after Mexico took “decisive actions” against organized crime and fentanyl trafficking.

She vowed retaliation and said she would announce Mexico’s response at an event on Sunday in Mexico City’s iconic Zocalo square.

The European Union’s executive Commission said it “deeply regrets” the decision, which risked disrupting global trade. Trump has vowed to impose “reciprocal tariffs” on EU goods on April 2.

PRICE HIKES

The tariffs were already sparking some U.S. price increases, running counter to Trump’s election vow to bring down living costs for Americans.

Target CEO Brian Cornell told CNBC that the retail giant would increase prices “over the next couple of days” on some seasonal grocery products such as avocados from Mexico.

“If there’s a 25 per cent tariff, those prices will go up … certainly over the next week,” Cornell said.

Electronics retailer Best Buy also warned of potential higher prices as the tariffs came into effect. Best Buy CEO Corie Barrie told analysts on a call that China remains the top source of products sold by the company, with Mexico in second place.

The 20 per cent tariff on Chinese imports will apply to several key Chinese electronics categories untouched by prior duties, including smart phones, laptops, video game consoles, smart watches and speakers and Bluetooth devices.

Barrie said the price increases could play out over a longer period, as Best Buy typically carries about six weeks worth of inventory.

STACKING CHINA TARIFFS

The extra 10 per cent duty on Chinese goods adds to a 10 per cent tariff imposed by Trump on February 4 to punish Beijing over the U.S. fentanyl overdose crisis. The cumulative 20 per cent duty comes on top of tariffs of up to 25 per cent imposed by Trump during his first term on some $370 billion worth of U.S. imports.

Some of these products saw U.S. tariffs increase sharply under former president Joe Biden last year, including a doubling of duties on Chinese semiconductors to 50 per cent and a quadrupling of tariffs on Chinese electric vehicles to over 100 per cent.

China’s new tariffs announced on Tuesday targeted a wide range of U.S. agricultural products including certain meats, grains, cotton, fruit, vegetables and dairy products.

Beijing also placed 25 U.S. firms under export and investment restrictions on national security grounds. Ten of these firms were targeted for selling arms to Taiwan.

China’s commerce ministry said the U.S. tariffs violated World Trade Organization rules and “undermine the basis for economic and trade cooperation between China and the U.S.”

U.S. farmers were hard hit by Trump’s first-term trade wars, which cost them about $27 billion in lost export sales and conceded share of the Chinese market to Brazil.

RECESSION FEARS

The tariffs on Mexican and Canadian products could have much deeper repercussions for a highly integrated North American economy that depends on cross-border shipments to build cars and machinery, refine energy and process agricultural goods.

“Today’s reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses and economic disaster,” Canadian Chamber of Commerce CEO Candace Laing said in a statement.

Even before Trump’s tariffs announcement, U.S. data on Monday showed factory gate prices jumped to a nearly three-year high, suggesting that a new wave of tariffs could soon undercut production.

The Federal Reserve Bank of Atlanta’s GDPNow model showed a stunning shift to a 2.8 per cent U.S. GDP contraction in the first quarter, from a 2.3 per cent estimated growth last week.

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“They’re going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs,” Trump said at the White House. He said there was “no room left” for a deal that would avert the tariffs by curbing fentanyl flows into the United States.

Why it matters: Canadian agriculture is heavily dependent on exports to the U.S.

Trump’s comments sent U.S. stocks down sharply in late afternoon trading. The dollar rose against the Mexican peso and the Canadian dollar following his remarks.

Trump also said reciprocal tariffs would take effect on April 2 on countries that impose duties on U.S. products.

CEOs and economists say the action, covering more than $900 billion worth of annual U.S. imports from its southern and northern neighbors would deal a serious setback to the highly integrated North American economy.

The tariffs are scheduled to take effect at 12:01 a.m. EST on Tuesday. At that point Canada and Mexico face tariffs of 25 per cent, with 10 per cent for Canadian energy. Mexican officials did not immediately respond to requests for comment.

Canadian Foreign Minister Melanie Joly told reporters that Ottawa was ready to respond. “There’s a level of unpredictability and chaos that comes out of the Oval Office, and we will be dealing with it,” she said.

Speaking on CNN, U.S. Commerce Secretary Howard Lutnick said both countries had made progress on border security but needed to do more to curb fentanyl flows into the U.S. to reduce deaths from the opioid drug.

Trump was also expected on Tuesday to raise fentanyl-related tariffs on Chinese imports to 20 per cent from 10 per cent currently, unless Beijing ends fentanyl trafficking into the U.S. Lutnick did not mention any potential changes to these duties, which would affect about $439 billion worth of annual imports.

Mexico’s response plans

Mexico, after avoiding the first round of Trump’s tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.

President Claudia Sheinbaum, in a press conference on Monday before Trump made his remarks, said her government was calm as it awaited Trump’s decision, but that Mexico but would respond if tariffs were imposed.

“We have a plan B, C, D,” Sheinbaum said, without giving any details. She added that coordination with the U.S. on trade and fentanyl trafficking has been “very good.”

According to the Centers for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the U.S., chiefly from fentanyl.

Navarro: Trump unwavering

White House trade adviser Peter Navarro told CNBC on Monday that the inflationary impact from any tariffs would be “second-order small, so I don’t see the president wavering on any of this, because he knows in order to get to a world in which America is strong and prosperous, with real wages going up and (more) factory jobs. This is the path that he’s chosen.”

Trump on Saturday added another trade action to a cascade of tariff announcements over the past month, opening a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5 per cent U.S. tariffs on softwood lumber, would be hit particularly hard.

During the prior week Trump ordered the revival of a tariff probe on countries that levy digital services taxes, proposed fees of up to $1.5 million every time a Chinese-built ship enters a U.S. port, and launched a new tariff investigation into copper imports.

These come in addition to his plans to determine higher U.S. “reciprocal tariffs” to match the tariff rates of other countries and offset their other trade barriers, a move that could hit the European Union hard over the value added taxes charged by EU countries.

But Trump’s “tariffs on steroids” agenda may keep inflation higher and could tip the global economy into recession, warned Desmond Lachman, a senior fellow at the conservative American Enterprise Institute.

Package orders

The White House late on Sunday issued technical orders from Trump related to tariffs on Mexico and Canada, declaring that low-value packages from the two countries cannot enter the U.S. duty-free under the “de minimis” exemption for shipments under $800. The ban will take effect once the Commerce Department determines that adequate screening measures take place, the order said.

Trump on February 4 suspended the de minimis exclusion for low-value Chinese packages, but the U.S. Customs and Border Protection Agency had to pause the suspension because packages were piling up at U.S. airports without a way to screen them.

Fentanyl traffickers have exploited the de minimis package exemption to ship fentanyl and its precursor chemicals into the U.S., and officials say the packages often enter unscreened.

—Additional reporting by Steve Holland and Susan Heavey in Washington, Kylie Madry and Ana Isabel Martinez in Mexico City, Anna Driver in New York.

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A White House official, however, said Trump’s previous March 4 deadline for the 25 per cent tariffs on Mexican and Canadian goods remained in effect “as of this moment,” pending his review of Mexican and Canadian actions to secure their borders and halt the flow of migrants and the opioid fentanyl into the U.S.

Trump has since reiterated the March 4 date for tariffs to be imposed on Canada and Mexico.

Why it matters: The Canadian agricultural sector is bracing for economic damage as U.S. tariffs are likely to disrupt highly-integrated supply chains

Trump sowed confusion during his first cabinet meeting on Wednesday, when he was asked about the timing for the start of the duties for Canada and Mexico and replied that it would be April 2.

“I have to tell you that, you know, on April 2, I was going to do it on April 1,” Trump said. “But I’m a little bit superstitious, I made it April 2, the tariffs go on. Not all of them but a lot of them.”

Trump’s comments prompted jumps in the value of the Canadian dollar and Mexican peso versus the greenback.

Canadian Innovation Minister Francois-Philippe Champagne told reporters that Canada would wait for signed executive orders from Trump before reacting.

“Our mission is still to avoid the tariffs, extend the suspension if we need to,” Champagne said. “We are prepared – there will be a targeted, strategic but a firm response” if Trump imposes tariffs.

Mexico’s Economy Ministry declined to comment on Trump’s remarks, but said Economy Minister Marcelo Ebrard will meet on Thursday with newly confirmed U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick on Friday.

Lutnick told the cabinet meeting that the fentanyl-related actions were paused for 30 days but referred to “overall” tariffs on April 2. He did not specify whether the March 4 deadline remained in effect.

“So the big transaction is April 2, but the fentanyl-related things, we’re working hard on the border,” Lutnick said. “At the end of that 30 days, they have to prove to the president that they’ve satisfied him in that regard. If they have, he’ll give them a pause, or he won’t.”

EU “different case” from Canada

Trump has targeted early April for imposing reciprocal tariffs matching import duty rates of other countries and offseting their other restrictions. His trade advisers consider European countries’ value added taxes to be akin to a tariff.

Trump, asked whether he has decided on a tariff rate for goods from the European Union, replied: “We have made a decision, and we’ll be announcing it very soon, and it’ll be 25 per cent, generally speaking, and that’ll be on cars, and all of the things.”

He said the EU is a “different case” from Canada and takes advantage of the U.S. in different ways.

“They don’t accept our cars. They don’t accept, essentially our farm products,” Trump said, adding that the EU was formed “in order to screw the United States.”

A European Commission spokesperson said the EU “will react firmly and immediately against unjustified barriers to free and fair trade,” including for tariffs that challenge legal and non-discriminatory policies.

“The European Union is the world’s largest free market. And it has been a boon for the United States,” the spokesperson said.

Roberta Metsola, president of the European Parliament, was planning to meet with U.S. lawmakers in Washington on Wednesday, but not with any Trump administration officials.

— Additional reporting by Bo Erickson in Washington and Ryan Jones in Toronto; Brendan O’Boyle, Raul Cortes and Sarah Morland in Mexico City; Ismail Shakil and David Ljunggren in Ottawa; and Andrew Gray in Brussels

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“The tariffs are going forward on time, on schedule,” Trump told a joint news conference with French President Emmanuel Macron. He had been asked whether Canada and Mexico had done enough to avoid the punishing 25 per cent U.S. duties.

Many had hoped the top two U.S. trading partners could persuade Trump’s administration to further delay tariffs that would apply to over $918 billion worth of U.S. imports from the two countries, from autos to energy. This could wreak havoc on the integrated North American economy, with the automotive sector hit particularly hard.

Trump did not specifically mention the March 4 deadline. He later referred to his desire for “reciprocal” tariffs to match the duty rates and offset the trade barriers of all countries, including France.

Trump and Macron did not publicly discuss another sticking point – digital services taxes imposed by France, Canada and other countries aimed at dominant U.S. tech giants including Google, Facebook and Amazon.

On Friday, Trump ordered his administration to revive tariff investigations into countries that levy digital service taxes on U.S. firms.

Border hopes dimmed

Canada and Mexico have taken steps to beef up border security, which bought them about a month’s reprieve from Trump’s earlier Feb. 1 deadline to impose the tariffs, based on a national emergency declaration.

Any further delay negotiated ahead of the deadline will keep the tariff threat in place at least until clear evidence emerges that Canadian and Mexican measures are working, said Dan Ujczo, a lawyer specializing in U.S.-Canada trade matters.

“There’s progress being made on the security front,” said Ujczo, senior counsel with Thompson Hine in Columbus, Ohio. “But it’s overly optimistic to think that those tariffs would be fully rescinded.”

The White House, U.S. Trade Representative’s office and Commerce Department did not respond to requests for comment on negotiations expected this week ahead of the March 4 deadline.

More tariff threats

Since Trump’s initial 25 per cent tariff threat and imposition of a 10 per cent duty on all Chinese imports, he has heaped on more tariff actions that could muddy the waters on border negotiations.

These include substantially raising tariffs on steel and aluminum to a flat 25 per cent, rescinding longstanding exemptions for Canada and Mexico, the largest sources of U.S. imports of the metals. These steep increases, which also extend to hundreds of downstream steel products, are due to take effect a week after the border tariffs, on March 12.

Trump has also said he wants to impose 25 per cent tariffs on imports of autos, pharmaceuticals and semiconductors, and to match duty rates and trade barriers of other countries.

The threatened tariffs could kick off an early launch of a renegotiation of the U.S.-Mexico-Canada agreement on trade that is due by 2026, Ujczo added.

Trump signed the USMCA into law in 2020 after renegotiating the 1994 North American Free Trade Agreement, but has increasingly expressed dissatisfaction with imports of autos from Mexico and Canada.

Progress cited

On Thursday, Mexican Economy Minister Marcelo Ebrard said on Thursday he had a “constructive dialogue” during a meeting with Trump’s top trade officials.

Ebrard said in a post on X that the “joint work” on U.S. trade matters starts on Monday.

Mexico has begun deploying as many as 10,000 national guard troops to its northern border, as part of the agreement that Mexican President Claudia Sheinbaum said also called on the U.S. to work to stop the flow of firearms into Mexico.

Canada this month created a new fentanyl czar to coordinate the fight against smuggling of the deadly opioid, appointing senior intelligence official Kevin Brosseau to the post.

Ottawa also has reclassified drug cartels as terrorist entities and has deployed drones, helicopters and other surveillance technologies on the vast northern U.S. border.

Canadian Prime Minister Justin Trudeau has kept in close contact with Trump on the border issues in recent days, including in a Saturday call that included discussions of joint efforts to curb fentanyl trade. He has threatened retaliatory tariffs on C$155 billion of U.S. imports, including American beer, wine and bourbon and Florida orange juice, but said last week that Canada is “going to do the work” to ensure that tariffs are not imposed.

Why it matters for Canadian agriculture

The imposition of tariffs could wreak havoc for Canadian farmers largest export market.

— Additional reporting by Jeff Mason

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