Canada and Mexico vowed immediate retaliation after Trump's announcement on Saturday. China said it would challenge Trump's 10% tariffs at the WTO and take unspecified countermeasures.
President Donald Trump said Sunday that tariffs he has imposed on Mexico, Canada and China could cause "some pain" to Americans, as Wall Street and America's biggest trading partners expressed hope that the trade war would not last long.
Trump, who began his second term as president on Jan. 20, defended the measures he announced Saturday. Canada and Mexico said they were working together to counter the 25% U.S. tariffs on imports that promise to shake the integrated economies of three North American countries that have had free trade agreements for decades.
Canada and Mexico vowed immediate retaliation following Trump's announcement on Saturday. China said it would challenge Trump's 10% tariffs at the World Trade Organization (WTO) and take unspecified countermeasures.
Critics said the measures against America's three largest trading partners would hurt Americans by raising prices and slowing global growth.
Trump defended his decision on social media on Sunday.
"The United States has huge deficits with Canada, Mexico, and China (and almost every country!), owes $36 trillion, and we are not going to be the 'Stupid Country' anymore," the Republican president wrote.
In capital letters, Trump added: "This will be America's golden age! Will there be any pain? Yes, maybe (and maybe not!). We will make America great again, and it will be worth all the costs we must pay."
Trump did not specify what he meant by "some pain."
A model measuring the economic impact of Trump's tariff plan by EY chief economist Greg Daco suggests U.S. economic growth will slow by 1.5 percentage points this year, plunge Canada and Mexico into recession and usher in "stagflation" -- high inflation, stagnant economic growth and high unemployment -- in the world's largest economy.
Financial markets were closed over the weekend, but the measures will be felt initially when US stock futures trade at 2300 GMT on Sunday.
Investors were anxiously awaiting further developments, but some analysts said there was some hope in the negotiations, especially with Canada and China.
"With just two days to go until implementation, it seems likely that the tariffs will go into effect, although a last-minute compromise cannot be completely ruled out," Goldman Sachs economists said in a note on Sunday.
They added that since the White House set very general conditions for their removal, the levies are likely to be temporary, "but the outlook is unclear."
Trump's tariffs, outlined in three executive orders, are due to take effect at midnight Tuesday (0501 GMT Wednesday). Trump has vowed to keep them in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration into the United States ends.
China left the door open to talks with the United States, but its most forceful response was on fentanyl.
"Fentanyl is a US problem," the Chinese Foreign Ministry said, adding that China has taken many measures to combat the problem.
Canada's ambassador to the United States, Kirsten Hillman, expressed hope on Sunday that an agreement could be reached.
"We're hopeful that it won't go into effect on Tuesday," Hillman said on ABC's "This Week."
Hillman said Canadian officials are willing to continue talking to the United States, but that Canadians expect their government to "fight back."
Trump has sounded particularly dismissive of Canada, calling for the country to become the 51st US state and arguing that it would "cease to exist as a viable country" without its "massive subsidy."
A Reuters/Ipsos poll released last week showed Americans were split on tariffs, with 54% against and 43% in favor.
DELIVER
The tariff announcement fulfills a repeated threat by Trump during the 2024 presidential campaign and since taking office, defying warnings from leading economists that a new trade war with key U.S. partners would erode U.S. and global growth while raising prices for consumers and businesses.
Less than two weeks into his second term, Trump is changing the rules of how America is governed and how it interacts with its neighbors and the rest of the world.
Trump declared a national emergency under the International Emergency Economic Powers Act and the National Emergencies Act to support the tariffs, which give the president broad powers to impose sanctions in crisis situations.
Trade lawyers said Trump was once again testing the limits of U.S. law, and the tariffs could face legal challenges. Democratic lawmakers Suzan DelBene and Don Beyer denounced what they called a flagrant abuse of executive power.
Republicans welcomed Trump's move. Industry groups and Democrats warned about the impact on prices.
"Who will suffer the most? American consumers, who will face skyrocketing prices on everything from groceries to gas to cars," U.S. Rep. Josh Gottheimer wrote on social media.
INVESTORS LOOK TO THE FUTURE
Investors were considering the effects of additional tariffs promised by Trump, including on oil and gas as well as steel, aluminum, semiconductor chips and pharmaceuticals. Trump has also promised action against the European Union.
"It's only a matter of time before the EU becomes a target," said Marchel Alexandrovich of Saltmarch Economics in London.
The European Union said it was not aware of any further tariffs being imposed on EU products and a European Commission spokesman said the bloc would "respond firmly to any trading partner that unfairly or arbitrarily imposes tariffs on EU products".
Europe's largest carmaker Volkswagen said it was counting on the talks to avert a trade conflict.
Automakers would be particularly hard hit, as high new tariffs on vehicles made in Canada and Mexico would burden a vast regional supply chain in which parts may cross borders multiple times before final assembly.
PREJUDICE TO AMERICANS
In a message to Americans, Canadian Prime Minister Justin Trudeau said U.S. citizens would be hurt by rising food and gasoline prices, as well as the possible closure of auto assembly plants and limited supplies of metals and minerals.
Trudeau urged Canadians to boycott the United States and its products.
On Saturday night, Trudeau said Canada would respond with 25% tariffs on $155 billion of U.S. products, including beer, wine, lumber and appliances, starting with $30 billion taking effect on Tuesday and $125 billion 21 days later.
Mexican President Claudia Sheinbaum did not provide details on the planned retaliatory tariffs.
A White House briefing paper said the tariffs would remain in place "until the crisis eases," but gave no details on what the three countries would have to do to win a reprieve.
Trump imposed only a 10% tariff on energy products from Canada after concerns raised by oil refiners and Midwestern states. At nearly $100 billion in 2023, crude imports accounted for about a quarter of all U.S. imports from Canada, according to U.S. Census Bureau data.
