Canadian PM Justin Trudeau describes Donald Trump's tariffs on his country, as well as China and Mexico, as "very dumb"
"We will not back down from a fight," Trudeau says, after announcing 25% retaliatory tariffs against billions of dollars' worth of American products - here's what Trudeau said in full
The US president warns that his administration would, in turn, raise its tariff on Canada "by a like amount"
Earlier, US and European stock markets fell after Trump's 25% tariffs on imports from Canada and Mexico began, as well as a new 10% levy against China
Beijing vowed to fight the US "to the bitter end", announcing up to 15% tariffs on a range of American products, and Mexico said it would outline retaliatory action on Sunday
Analysts warn the tariffs could push up prices for American households and have a knock-on effect on consumers around the world, writes our business reporter
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Image source, Getty ImagesSwiss chocolate maker Lindt & Sprüngli will step up its supplies of chocolate to Canada from Europe to avoid the impact of Canadian tariffs imposed to counter the latest US customs being imposed by President Donald Trump.
Lindt has several factories in the US from which it supplies to Canada.
"The volumes that we source currently for Canada can all be shifted to Europe," CEO Adalbert Lechner says.
"So far, we have a Plan B to avoid these tariffs in Canada."
Image source, EPAWe've had some more global reaction, with Germany's economy minister saying Europe would respond with "unity and self-confidence" if President Trump imposes tariffs on its products.
Robert Habeck says Germany supports the EU Commission's approach of working with the US government "to find a negotiated solution".
Shares of German carmakers fell, as tariffs against Canada and Mexico came into effect.
Volkswagen and BMW, both of which have assembly plants in Mexico for vehicles they sell in the US, each lost about 3%.
Despite wanting a deal, Habeck adds that "the EU will not be pushed around".
Jennifer Meierhans
Business reporter
Image source, Getty ImagesStock markets around the world have fallen following the introduction of tariffs on goods entering the US from China, Canada and Mexico.
The three major stock market indexes in the US sank following the news, while the FTSE 100 index of the UK's biggest publicly-listed companies opened sharply lower on Tuesday and stock markets in Asia are also down.
In the US, the Dow Jones closed 1.5% lower and the S&P 500 ended the day down 1.8% on Monday.
While in Asia on Tuesday, the Nikkei 225 dropped 1.2% and China's Hang Seng Index opened down 0.3%.
London's FTSE 100 opened lower in early trading while the main stock exchanges in Germany and France have also dipped.
João da Silva
Business reporter
Trump's new China tariffs come at a vulnerable time for the country's economy, which has been struggling with a property downturn, low domestic spending and youth unemployment.
Exports, however, have been a rare bright spot.
"Exports' run of good fortune will hit a wall as Trump ramps up tariffs on Chinese goods. If the tariffs linger, Chinese exports to the US could drop by a quarter to a third," said Harry Murphy Cruise, head of China economics at Moody's Analytics.
"The chaos that tariffs leave in their wake is kryptonite for investment... tariffs are set to deliver a one-two punch to China’s economy, landing blows to both exports and investment."
Image source, Getty ImagesA platoon of M1 Abrahams battle tanks, manufactured by General Dynamics Land Systems
Earlier, we reported that Beijing had targeted several US firms in aviation, tech and defence, aside from announcing retaliatory tariffs against some agriculture goods as well.
Let's take a look at what these firms do.
For one, Beijing has barred 15 US companies from buying dual-use materials or tech from China - dual-use because they can be used for both civilian and military manufacturing.
Some of these firms make military equipment - such as General Dynamics Land Systems (GDLS), which designs and produces military vehicles, including battle tanks for the US and South Korea and Shield AI, a Silicon Valley-based defence start-up which makes AI software for unmanned aircraft and drones.
Additionally, it has also added 10 firms to the "unreliable entity" list, which means they cannot trade with China, or invest in the country. These include Huntington Ingalls Industries, America's largest military shipbuilding company and TextOre, whichspecialises in analysing open-source intelligence for the defence and intelligence operations.
In some cases, the retaliation may well be symbolic because it is unclear how much these firms import from China - therefore, it's hard to say how exactly they will be impacted.
Michael Race
Business reporter
The US, Canada and Mexico have deeply integrated trade channels and economies. Goods worth some $2bn cross the borders of the countries daily.
With the introduction of tariffs on goods entering the US now in force, and Canada responding with tariffs of its own and Mexico likely to follow suit, economists warn that means one thing for consumers: higher prices.
That’s because tariffs – a tax – is paid by the company importing the goods and businesses might decide to pass on the extra charge directly to consumers. They could also reduce imports, which might mean fewer products are available.
Goods from cars, whiskey and tequila, to houses and maple syrup could go up in price.
As we have been reporting this morning a wave of tariffs have come into force on Chinese, Mexican and Canadian imports to the US.
More tariffs are planned for President Donald Trump's second term in office - let's have a quick look at what we know is still on the horizon:
Image source, ReutersCanada exports enough electricity to power some six million American homes.
And while the US also exports electricity to Canada, it imports far more: In 2023 for example, Canada sold $3.2bn worth of power to the US while importing $1.2bn - holding up a $2bn surplus.
Ontario Premier Doug Ford has threatened electricity restrictions if the US moves ahead with its tariffs.
"If they want to try to annihilate Ontario, I will do anything, including cutting off their energy, with a smile on my face," Ford told NBC on Monday.
Energy is the largest contributor to bilateral trade between US and Canada.
Apart from electricity, 99% of natural gas imports to the US come from Canada. Canada also exports more than four million barrels of crude oil to the US per day, supplying some 20% of its total crude oil demand.
Let's bring you some reaction from Europe where France's economy minister says the European Union should reach a "balanced deal" with the United States on customs tariffs.
It comes amid fears the continent could be Trump's next target.
Eric Lombard tells France Info radio: "We have negotiators who are playing hardball, we will play hardball but... we need to reach a balanced deal to protect our economies."
“The European Union is the United States’ largest market," Lombard says.
Let's move to China, which is now facing 20% US tariffs, on top of previous levies that targeted specific sectors.
China has said that it will fight to the "bitter end" if the US continues its trade actions.
"If the United States... persists in waging a tariff war, a trade war, or any other kind of war, the Chinese side will fight them to the bitter end," foreign ministry spokesman Lin Jian said at a regular press conference on Tuesday.
Beijing's counter measures - which include up to 15% tariffs on a range of American agricultural and food products - are to protect China's own interests, he said.
Lin also urged Washington to return to dialogue with Beijing as soon as possible.
Dharshini David
Chief economics correspondent
It’s hard to evaluate the impact - but one recent case stands out.
In 2018, President Trump imposed tariffs of up to 50% on imported washing machines after American producer Whirlpool complained about being undercut by its South Korean rivals.
Key players from there then set up factories in America - creating close to 2,000 jobs. But at what cost?
An imported washing machine cost an American shopper almost a third more at the start of 2023, just before tariffs were abolished, than five years previously, outpacing general inflation.
And 2,000 jobs is a tiny fraction of the 160 million that exist in the US.
Put it another way, add up the costs of tariffs and researchers at Duke University believe each of those jobs cost Americans the equivalent of more than $800,000.
Examples like that explain why, regardless of the spin, tariffs get most economists in a lather.
Let's take a quick look at what goods will be hit by the new US-Canada tariffs.
Two of the biggest commodities coming out of Canada that are likely to be impacted by US tariffs are fuel and lumber
Canada is America's largest foreign supplier of crude oil - 61% of oil imported into the US between January and November last year came from its northern neighbour, according to official figures.
And the US also imports about a third of its softwood lumber from Canada each year, which is a key building material.
The retaliatory tariffs that Canada announced against the US on Monday will impact a huge range of products. The list includes 3.5 billion Canadian dollars ($2.4bn) worth of cosmetics and body care and C$3.4 billion worth of appliances and other household items, as well as products such as orange juice, peanut butter, wine, spirits, beer, coffee and apparel.
Canada's first tranche of tariffs also includes motorcycles, while the second tranche is expected to include passenger vehicles and trucks - significant targets, considering the automotive industry is a major source of trade between the two countries.
Donald Trump has accused Canada and Mexico of failing to prevent criminal gangs from smuggling fentanyl into the US. And Trump says the 25% tariffs on both are linked to making the neighbouring countries crack down on illegal drugs crossing the border.
Canadian Prime Minister Justin Trudeau said on Sunday, from a summit on Ukraine in London, that Canada was "not an issue" as a source of illegal fentanyl in the US.
Since September, 4,500lb (2,040kg) of fentanyl have been seized in the US, according to figures published by US Customs and Border Patrol (CBP), external.
Almost all (98%) was intercepted at the southwest border with Mexico. Less than 1% was seized at the northern US border with Canada. The remainder was from sea routes or other US checkpoints.
The Canada Border Services Agency (CBSA) says it has been "surging" its efforts to tackle fentanyl crossing into the US.
As part of its retaliatory action towards the US, China has clapped back with its own tariffs against a range of American agriculture products, including wheat, corn, beef and soybeans.
That's significant, given China is the US's biggest buyer of such goods.
In the fiscal year ending 2023, 64% of the US's total agricultural export value went to its top five markets - and exports to China represented the lion's share, at $33.7bn.
This was followed by Mexico at $28.2bn and Canada at $27.9bn.
"I don’t think there is a clear definition of a trade war, but I think the imposition of 25% tariffs against a country’s largest trading partner, followed by 25% retaliation one minute later, must be getting close," said Deborah Elms, head of trading policy at the Hinrich Foundation.
She was referring to Canada's retaliatory tariffs against the US.
Speaking of their relationshp, she added: "This is particularly shocking as tariffs are coming on products that have not had any tariffs at all for decades and between two neighbours that are incredibly economically intertwined."
Lucy Acheson
Business reporter
Image source, ReutersAnalysts are warning that President Trump’s tariffs could harm global trade, but he has insisted they are needed to "protect" Americans and the US economy.
So, what does that mean?
Protectionism is an economic policy of restricting imports to protect domestic industries from foreign competition.
Governments can use tariffs, quotas and subsidies to make foreign goods more expensive and harder to get.
The idea is to get consumers to buy locally, protecting jobs and boosting the national economy. But protectionism is not without its costs: it can raise prices for consumers and can spiral into trade wars, with countries imposing counter-tariffs on imported goods.
Image source, Getty ImagesIf you are just joining us, here's what you need to know about Trump's tariffs against the US's three biggest trading partners, which have sparked retaliatory action from two of them, Canada and China:
Stay with us as we bring you the latest.
Dharshini David
Chief economics correspondent
Tariffs are essentially a tax on imports from other countries, designed to protect against cheaper competition from elsewhere and boost businesses and jobs at home. President Trump also sees them as a substantive way of raising tax money.
However, in practice they can have detrimental effects on the well-being of both consumers and businesses - including the ones they set out to protect. It can be shoppers who bear the bulk of tariffs in the form of higher prices, if they're passed on, as well as less choice.
Meanwhile, tariffs tend to trigger retaliation from targeted countries, disadvantaging businesses who are looking to export their goods there. So ultimately, tariffs can hold back trade, growth, and indeed job creation - which is why these moves by President Trump have caused such consternation around the globe.
Natalie Sherman
New York business reporter
It is not just companies bringing products into the US that are worried about the tariff fight. US-based exporters are concerned too.
Scott Beggs leads a US manufacturing business in Mississippi that employs more than 100 people making products including wood panelling and backyard ziplines.
He’s been pushing to expand into Canada, with some success. But in recent weeks, his Canadian buyers have been putting their orders on hold, angry about US actions and expecting their government to retaliate. Canada has said its retaliatory tariffs would kick in as soon as the US levies come into effect.
“All my efforts for the last four to five years are going to go down the toilet,” Mr Beggs said.