Trump enforced 25% tariffs on Mexico and Canada, sparking a trade war. Canada retaliated with tariffs, and US markets dropped.

US President Donald Trump announced on Monday that Washington would enforce previously delayed tariffs on Mexico and Canada.

The 25% tariffs officially took effect at 05:01 UTC on Tuesday as scheduled, after both sides failed to reach an agreement. Last month, Trump had ordered a 30-day postponement of the tariffs, but he indicated there would be no further extensions for the two North American countries.

"There is no room left for Mexico or Canada," Trump told reporters on Monday. "The tariffs, you know, they're all set, they go into effect tomorrow," he stated firmly.

Under the newly implemented tariff regime, energy resources imported from Canada will be subject to a lower levy of 10%.

Following Trump's remarks, US stock markets closed sharply lower on Monday afternoon, reflecting investor concerns over the trade measures.

Additionally, Trump announced that reciprocal tariffs targeting countries that impose duties on US products would take effect on April 2.

In addition to tariffs on Mexico and Canada, Trump had already imposed a 10% tariff on Chinese products in February, with that rate scheduled to increase to 20% on Tuesday.

These trade policies have sparked growing fears of a trade war among North American economies, which are deeply interconnected. Many analysts warn that Washington’s measures could disrupt supply chains and increase costs for businesses and consumers.

Trump also stated that he intends to impose 25% tariffs on goods imported from the European Union.

Canada responded swiftly to the US decision, with Prime Minister Justin Trudeau vowing to implement retaliatory tariffs.

"Should American tariffs come into effect tonight, Canada will, effective 12:01 a.m. EST tomorrow, respond with 25% tariffs against $155 billion of American goods," Trudeau declared in a statement ahead of the deadline. He emphasized that "there is no justification" for Washington’s actions.

Earlier on Monday, Canadian Foreign Minister Mélanie Joly had already indicated that Canada was prepared to counter Washington’s measures.

"There's a level of unpredictability and chaos that comes out of the Oval Office, and we will be dealing with it," she told reporters.

"If Trump is imposing tariffs, we are ready," Joly added. "We are ready with $155 billion worth of tariffs, and we're ready with the first tranche of tariffs, which is $30 billion."

She also revealed that Ottawa had developed a border strategy, which it had presented to the Trump administration the previous week.

Trump, for his part, had demanded that Mexico and Canada bolster their border security efforts and intensify measures to combat the distribution of illicit drugs, including fentanyl