Trump dashes hope for last-minute Canada and Mexico deal ahead of 25% tariffs

President Donald Trump said that the U.S. will impose 25% tariffs on Canada and Mexico on Tuesday, scrapping hopes of a last-minute deal that would avoid stoking a trade war with America’s top trading partners.

Trump, speaking at the White House on Monday afternoon, said there was “no room left for Mexico or for Canada” to negotiate on the new import duties.

“They’re all set. They go into effect tomorrow,” he said.

Stocks, already trading in the red, sank further following Trump’s comments.

Trump on Feb. 1 signed an executive order imposing 25% tariffs on imports from Mexico and Canada, with oil from Canada subject to a 10% duty. But he postponed those plans for a month on Feb. 3, after both U.S. neighbors pledged to take steps to address issues at their respective U.S. borders.

Trump confirmed last week that the paused tariffs would go back into effect Tuesday, complaining that illicit drugs are still “pouring into our Country from Mexico and Canada at very high and unacceptable levels.” He also announced that an additional 10% tariff on Chinese imports would take effect the same day.

Earlier Monday, Commerce Secretary Howard Lutnick had suggested that while Trump would take executive actions on Tuesday, he might soften his tariff demands.

“He knows they’ve done a good job on the border. They haven’t done enough on fentanyl. Let’s see how the president weighs that today,” Lutnick said on CNN. “We’re going to talk about it all day today, and then he’ll let everybody know tomorrow with the plans.”

Mexico had initially managed to stave off Trump’s tariffs for a month by pledging to send 10,000 soldiers to the U.S. southern border to combat drug trafficking operations.

With that deadline looming, Mexico in late February extradited 29 cartel members to the U.S.

But those actions apparently failed to placate Trump.

“Just so you understand, vast amounts of fentanyl have poured into our country from from Mexico, and as you know, also from China, where it goes to Mexico and goes to Canada,” he said Monday afternoon.

Tariffs are essentially taxes on foreign goods that are paid by the importers. Critics warn tariffs will ultimately lead to higher prices for U.S. consumers, but they are Trump’s favorite way to flex America’s muscle against its adversaries and allies alike.

Since taking office for a second term, Trump has already slapped 10% tariffs on Chinese imports and imposed a 25% duty on all U.S. imports of steel and aluminum. He has also unveiled a plan to enact “reciprocal tariffs” on other countries that have their own tariffs on the U.S.

Trump’s comments on Monday came during an event touting a $100 billion investment in the U.S. by Taiwan Semiconductor Manufacturing, or TSMC.

Trump said that by planning to building new chip fabrication plants in Arizona, TSMC will avoid getting hit with their own tariffs.

He admonished Canada and Mexico to do the same.

“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.

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