Wall Street plunges as Trump confirms tariffs
Wall Street’s main stock indexes have posted big losses after US President Donald Trump announced the start of 25 per cent tariffs on Canada and Mexico.
The S&P 500 had its biggest daily percentage decline since December 18 on Monday (US time), after Trump’s announcement.
Stocks had already slipped after an ISM survey, and the losses worsened after Trump said 25 per cent tariffs on Canada and Mexico would go into effect on Tuesday with reciprocal tariffs starting April 2.
“The tariffs, they’re all set. They go into effect tomorrow,” Trump said, adding there was “no room left for Mexico or Canada” to make a deal before midnight local time.
“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 get no tariffs.”
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CEOs and economists say the action, covering more than $US900 billion ($A1.4 trillion) worth of annual US imports from its southern and northern neighbours will deal a serious setback to the highly integrated North American economy.
The tariffs are scheduled to take effect at one minute past midnight on Tuesday, US time. At that point Canada and Mexico will 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 said Ottawa would be 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.
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Speaking on CNN, US Commerce Secretary Howard Lutnick said both countries had made progress on border security but needed to do more to curb fentanyl flows into the US to reduce deaths from the opioid drug.
Trump is also expected on Tuesday to raise fentanyl-related tariffs on Chinese imports to 20 per cent from 10 per cent, unless Beijing ends fentanyl trafficking into the US.
Lutnick did not mention any potential changes to these duties, which would affect about $US439 billion ($A704 billion) worth of annual imports.
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 measures on imported Chinese goods.
Ahead of Trump’s remarks on Monday, Mexican President Claudia Sheinbaum said her government was calm as it awaited Trump’s decision, but that Mexico would respond if tariffs were imposed.
“We have a plan B, C, D,” Sheinbaum said, without giving any details. She added that co-ordination with the US on trade and fentanyl trafficking has been “very good”.
According to the Centres for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the US, chiefly from fentanyl.
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,” he said.
– with AAP
