President Donald Trump said on Sunday the sweeping tariffs that he has imposed on Mexico, Canada and China may cause “short term” pain for Americans as global markets reflected concerns the levies could undermine growth and reignite inflation.
Trump said he would talk on Monday with the leaders of Canada and Mexico, which have announced retaliatory tariffs of their own, but downplayed expectations that they would change his mind.
“I don’t expect anything dramatic,” Trump told reporters as he returned to Washington from his Mar-a-Lago estate in Florida. “They owe us a lot of money, and I’m sure they’re going to pay.”
He also said tariffs would “definitely happen” with the European Union, but did not say when.
Critics say the Republican president’s plan to impose 25% tariffs on Canada and Mexico and 10% tariffs on China will slow global growth and drive prices higher for Americans.
Trump says they are needed to curb immigration and narcotics trafficking and spur domestic industries.
“We may have short term some little pain, and people understand that. But long term, the United States has been ripped off by virtually every country in the world,” he said.
Financial market reaction, opens new tab was not positive. U.S. stock futures slumped in early Asian trading, with Nasdaq futures NQc1, opens new tab down 2.35%, S&P 500 futures EScv1, opens new tab 1.8% lower. U.S. oil prices jumped more than $2, while gasoline futures jumped more than 3%.
North American companies braced for new duties which could upend industries from autos to consumer goods to energy.
Trump’s tariffs will cover almost half of all U.S. imports and would require the United States to more than double its own manufacturing output to cover the gap – an unfeasible task in the near term, ING analysts wrote.
“Economically speaking, escalating trade tensions are a lose-lose situation for all countries involved,” the analysts wrote in a note on Sunday.
Other analysts said the tariffs could throw Canada and Mexico into recession and usher in “stagflation” – high inflation, stagnant economic growth and elevated unemployment – at home.
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The Trump tariffs, outlined in three executive orders, are due to take effect 12:01 a.m. ET (0501 GMT) on Tuesday.
Some analysts said there was some hope for negotiations, especially with Canada and China.
Goldman Sachs economists said the levies are likely to be temporary but the outlook is unclear because the White House set very general conditions for their removal.
A White House fact sheet gave no details on what the three countries would need to do to win a reprieve.
Trump vowed to keep them in place until what he described as a national emergency over fentanyl, a deadly opioid, and illegal immigration to the United States ends.
China has said it will challenge the tariffs at the World Trade Organization and take other countermeasures, but also left the door open for talks with the United States.
Its sharpest pushback was over fentanyl.
“Fentanyl is America’s problem,” China’s foreign ministry said, adding that China has taken extensive measures to combat the problem.
