Stock markets across the globe sank after US President Donald Trump made it clear that tariffs on Mexico and Canada would go into effect as planned.
Trump's comments made on Monday struck fears of a trade war in North America and sent financial markets reeling. The US stocks tumbled sharply in late afternoon trading, while the Mexican peso and Canadian dollar also fell, reports NDTV.
The US President has said that 25 percent American tariffs on imports from Canada and Mexico will take effect from Tuesday after the 30-day pause on duties, tied to illegal border crossings and the flow of fentanyl into the United States expires.
The American also reaffirmed that he will increase tariffs on all Chinese imports to 20 per cent from the previous 10 per cent levy to punish Beijing for failing to halt shipments of fentanyl to the US.
"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.
On hiking tariffs on all Chinese imports, the president said in an order that Beijing "has not taken adequate steps to alleviate the illicit drug crisis."
The tariffs are scheduled to take effect at 12:01 a.m. EST (0501 GMT) on Tuesday, the Trump administration confirmed in Federal Register notices.
At that point, the US Customs and Border Protection agency will begin collecting 25 per cent Canadian and Mexican goods, with a 10 per cent duty for Canadian energy.
Trump has long maintained that tariffs were a useful tool to correct trade imbalances and protect US manufacturing, dismissing concerns that the measures risk economic damage in the US, despite the close ties, especially in North America, where businesses have enjoyed decades of free trade.
According to CEOs and economists, Trump's tariffs on Canada and Mexico, covering more than $900 billion worth of annual US imports, will deal a serious setback to the highly integrated North American economy.
Mexico's economy ministry said that there would be no public response until President Claudia Sheinbaum's regular morning press conference on Tuesday.
On Monday, she appeared to send a message to Trump when she said at a public event in the city of Colima that "Mexico has to be respected". She has vowed to respond, saying, "We have a plan B, C, D."
Canadian Foreign Minister Melanie Joly told reporters that Ottawa was ready to respond, but offered no specifics.
Ontario Premier Doug Ford told NBC that the U.S. tariffs and Canada's retaliation would be "an absolute disaster" for both countries.
"I don't want to respond but we will respond like they've never seen before," Ford said, adding that Michigan auto plants would likely shut down within a week and that he would halt nickel shipments and cross-border transmission of electricity from Ontario to the U.S.
"I'm going after absolutely everything," Ford said.
Meanwhile, China's state-run Global Times newspaper said that Beijing had prepared countermeasures, which would probably target US agricultural and food products.
The three major indexes in the US sank after Trump's comments. The Dow Jones Industrial Average ended the day down 649.67 points, or 1.48 per cent, the S&P 500 lost 104.78 points, or 1.76 per cent, and the Nasdaq Composite dropped 497.09 points, or 2.64 per cent.
A gauge of the Magnificent Seven megacaps sank 3.1 per cent. A UBS basket of US stocks negatively impacted by tariffs sank 2.9 per cent.
Effects were also seen in Asian and Australian markets, with Tokyo, Hong Kong and Sydney shares down. The benchmark Nikkei 225 index plunged 2.43 per cent, while the broader Topix index lost 1.48 per cent.
Indian shares also opened lower on Tuesday, tracking Asian peers. The Nifty 50 fell 0.64 per cent to 21,979.85 by 9:15 a.m. IST, while the BSE Sensex lost 0.45 per cent to 72,753.64.
All 13 major sectors logged losses at the open, while the broader small- and mid-caps fell about 1 per cent each. The MSCI Asia ex-Japan dropped about 0.6 per cent, tracking an overnight decline in Wall Street equities.
Investors are increasingly becoming wary about rising geopolitical tensions and the prospect of tit-for-tat tariffs worsening the global trade spat.
Automaker shares fell sharply, with General Motors, which has significant truck production in Mexico, down 4 per cent and Ford falling 1.7 per cent.
Gustavo Flores-Macias, a public policy professor at Cornell University, said consumers could see price hikes within days.
Bd-pratidin English/Tanvir Raihan
