A second round of tariffs from Donald Trump is set to begin in just hours with new duties on America’s top three trading partners: Canada, China, and Mexico.
There is “no room left for Canada or for Mexico,” Trump reiterated Monday afternoon at the White House, saying he wouldn’t pare back his tariffs levels on those two countries.
“They’re all set,” he added.
The president signed the first of these actions on Monday afternoon with new duties against China in an order that charged the country “has not taken adequate steps to alleviate the illicit drug crisis.”
The president is imposing 25% duties on Canadian and Mexican imports following a 30-day pause. He is also implementing a second round of 10% duties on Chinese imports to increase the blanket tariffs on that nation to 20%.
The duties represent a rapid escalation of Trump’s tariff plans, which are now set to surpass the economic toll of his entire first term if he keeps them in place.
President Donald Trump speaks in the Roosevelt Room of the White House on March 3. (ROBERTO SCHMIDT/AFP via Getty Images) ·ROBERTO SCHMIDT via Getty Images
The Tax Foundation estimates that Trump’s 2018-2019 tariffs shrank US GDP by about 0.2%. The proposed tariffs this week against Canada and Mexico alone are projected to surpass that, the group said, even setting aside all-but-certain retaliation and Trump’s moves against China.
Erica York, the group’s vice president of federal tax policy, called all of Trump’s actions so far “a $130 billion annual tax increase on Americans” that could work out to $1,000 in additional costs per household.
The back and forth from the White House came after a day of meetings among Trump and his economic team.
US stocks plummeted on Monday as investors assessed the economic impact of the Trump administration’s tariff plans. The administration’s approach to the economy appears to be weighing down both the investing and consumer outlook in the United States.
“The economy appears to be gagging on the uncertainty created by the haphazard economic policymaking happening in DC,” Moody’s Analytics chief economist Mark Zandi said in a recent post. He listed a range of factors, including “tariff wars, DOGE cuts to jobs and government programs and agencies, and deportations [that] are sowing confusion, which puts a pall on investment, hiring and spending.”
The potential economic costs were also underlined Monday, with the Institute for Supply Management’s PMI Manufacturing report for February coming in below expectations on tariff uncertainty.
Committee chair Tim Fiore then told Yahoo Finance Monday “I really quiver to think of what would happen if the Mexico and Canada tariffs go into place in the next couple of days and what that would mean for the PMI for March.”
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Read more: What are tariffs, and how do they affect you?
Underlying the trade tensions is a market recognition that Trump following through on even a small portion of his promises will have wide-ranging effects.
The Tax Foundation calls Trump’s 2018-2019 tariffs “one of the largest tax increases in decades” and his promises are much more wide-ranging this time. This week’s actions come on top of 10% duties on Chinese goods in early February over the drugs and migration issues.
And another deadline looms next week with a plan for 25% tariffs on steel and aluminum set to take effect on March 12.
A recent Goldman Sachs (GS) research paper on the issue noted that if Trump just followed through on that second threat — and then does nothing else but keep the tariffs in place — it would be “roughly equivalent to all of the tariff hikes from the first Trump administration.”
And plenty more is still possible. Trump has launched Commerce Department investigations into products such as semiconductors, copper, automobiles, and pharmaceuticals for potential new duties.
In recent days, Trump added timber to the list, with a new investigation set to get underway there. He also posted Monday that new duties would be coming on external agriculture products in April, telling US farmers to sell more of their crops inside the United States and “Have Fun!”
Trump has also recently promised 25% duties on the European Union without specifying exactly when those might come into force.
And then waiting next month is what Commerce Secretary Howard Lutnick calls “the big transaction”: reciprocal tariffs that could begin to be implemented on a wide array of nations and goods themselves starting on April 2.
All told, charged former Trump communications director turned outspoken critic Anthony Scaramucci to Yahoo Finance this week, “I don’t think this sort of blanket approach is the right way to do it, and I think he’s [Trump] is going to put us into a recession.”
This week’s deadline comes after Trump agreed to the pause last month following talks with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau.
But Trump declined to offer any more delays and all three targeted nations have also signaled detailed plans to implement wide-ranging and creative retaliations.
Canada could potentially target key sectors in GOP-run states like Florida orange juice or Kentucky bourbon, and China is set to further target the agriculture sector. Mexican President Claudia Sheinbaum told reporters on Monday that her nation was ready for whatever Trump decides saying “we have a plan B, C, D,”
Canada’s foreign minister confirmed Monday afternoon that the country had a sweeping package of counter-tariffs prepared.
The plan, she said according to a Blloombrg report, is for an initial set of 25% tariffs on certain goods with a second wave set follow in a few weeks time on items like cars, trucks, steel and aluminum.
The duties will be enforced using a 1977 law called the International Emergency Economic Powers Act, which endows the president with wide-ranging authority to act without even the minimal delays of things like a Commerce Department review.
This post has been updated with additional developments.
Ben Werschkul is Washington correspondent for Yahoo Finance.
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