President Trump said Monday that sweeping tariffs on Canada and Mexico would go into effect on Tuesday morning, saying in remarks at the White House there was no chance for a last-minute deal to avert the levies.
“The tariffs, you know, they’re all set,” Mr. Trump said. “They go into effect tomorrow.”
The tariffs will add a 25 percent fee on all Mexican and Canadian exports coming across those borders and an additional 10 percent for Chinese goods.
Mr. Trump has described this as an effort to pressure those countries to stop the flow of deadly drugs and migrants to the United States. But the tariffs will have significant consequences for companies that rely on international supply chains, and will also likely result in higher costs for American consumers.
Mr. Trump had threatened to impose the levies on the three countries beginning Feb. 4. But he decided to pause them on Canada and Mexico for one month after both countries promised measures like Mexico’s sending more troops to the border and Canada’s appointing a “fentanyl czar.”
Mr. Trump did move forward with imposing a 10 percent tariff on all products from China, which triggered retaliation from that country. He is now planning another 10 percent on all Chinese imports, which would come on top of the 10 to 25 percent tariffs he imposed on many Chinese products in his first term.
Howard Lutnick, the commerce secretary, said in an interview on CNN on Monday that the Mexicans and Canadians had “done a nice job on the border” but that fentanyl deaths had not fallen by enough.
The president has “to decide how he wants to play it,” Mr. Lutnick said. “He’s going to decide this afternoon and tomorrow we’re going to put out those tariffs.”
Investors had hoped for last minute reprieve, with the confirmation that tariffs would go into effect sending stocks sharply lower. The S&P 500 fell more than 2 percent, on course for its worst one day fall so far this year. The Russell 200 index of smaller companies more exposed to the ebb and flow of the economy fell 2.5 percent. The Vix volatility index, also known as Wall Street’s “fear gauge” rose sharply to 24, above its long term average.
Company executives and foreign officials have been scrambling to avert the consequences of those tariffs, which will significantly increase the cost of bringing goods in from America’s three largest trading partners.
Canada and Mexico are both deeply dependent on exports to the United States, and Mr. Trump’s threats have whipped their governments into action. Delegations of officials have made trips to Washington in recent weeks, including to meet with Mr. Lutnick.
In contrast, Chinese officials have not rushed to Washington with new concessions. People familiar with the discussions say that Beijing is still probing what Mr. Trump wants more broadly from the relationship.
President Claudia Sheinbaum of Mexico said in a news conference Monday that meetings with U.S. counterparts had gone “very well” and that her government will now wait for Mr. Trump’s decision. Ms. Sheinbaum displayed a graphic with data from U.S. Customs and Border Protection showing a 49.9 percent drop in fentanyl seizures on the border from October, when she took office, to January.
“We have a plan, A, B, C,” she said. “We have communicated, we have made agreements and coordination, but it depends on the president of the U.S. Whatever the decision is, we will also make our decisions.”
The prospect of new tariffs — in addition to a variety of other proposed levies on steel, aluminum, copper, timber and other products — have elicited anxiety and frustration from businesses selling everything from automobiles to breast pumps, who say tariffs will raise their costs as they move goods across borders.
Canada, Mexico and China account for more than 40 percent of U.S. imports. The tariffs that Mr. Trump threatened would dwarf any of the trade measures he has previously taken, raising the average U.S. tariff rates “to levels not seen since the 1940s,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.
For Canada and Mexico, most trade with the United States has faced zero tariff rates since the 1980s, he said, with free trade agreements for automobiles even dating back to the 1960s.
“Increasing tariffs from zero to 25 percent overnight is likely to be much more disruptive to those now highly integrated North American supply chains than anything President Trump did in his first term,” Mr. Bown said.
That has created intense uncertainty for business owners. That includes Logan Vanghele, 28, who runs a small company that sells lighting and equipment for aquariums, all of which is made in China.
Joe Rennison, Minho Kim and Paulina Villegas contributed reporting.
