Trump's Mexico and Canada tariffs begin, roiling markets

What happened

President Donald Trump's 25% tariffs on goods from Canada and Mexico went into effect early Tuesday morning, as did an additional 10% tax on goods imported from China, sparking a likely trade war with America's top three trading partners. Stocks plunged after Trump affirmed Monday that the tariffs would take effect Tuesday. China and Canada quickly announced retaliatory tariffs on U.S. imports.

Who said what

Trump initially said the import taxes were designed to force Canada and Mexico to crack down on cross-border immigration and fentanyl smuggling, but Monday he "appeared to change his terms," The New York Times said. "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 told reporters.

"Tariffs will disrupt an incredibly successful trading relationship," Canadian Prime Minister Justin Trudeau said, and they violate the U.S.-Mexico-Canada free trade agreement Trump negotiated and signed in his first term. Trudeau said Canada would immediately slap 25% tariffs on $21 billion worth of targeted U.S. goods, rising to $107 billion in 21 days if Trump's tariffs are still in effect. China said it would add 10% or 15% taxes on several agricultural products, including beef, soybeans and chicken.

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The tariffs are an "extraordinary political gamble by a president who was returned to power by voters angered over years of high inflation," The Washington Post said. Prices are likely to go up on everything from Chinese-made smartphones and gaming consoles to "Mexican tequila, beer and avocados" and "Canadian crude oil and lumber, testing consumer patience with Trump's approach." Trump has "shown a willingness to buck the warnings of mainstream economists and put his approval on the line" to enact tariffs he has long believed "can fix what ails the country," The Associated Press said.

What next?

Mexico is expected to outline its retaliatory measures Tuesday. Trump's "blistering pace of tariff actions" was likely to continue, Reuters said, with more planned this month and next. The tariffs could be "short-lived if the U.S. economy suffers," the AP said, but a feature of the "disorienting volatility" Trump has "injected" into global markets is that nobody knows "what he'll do next."