US President Donald Trump says there is no chance for Mexico or Canada to prevent 25 per cent tariffs from taking effect on Tuesday, sending financial markets reeling on the prospect of new economic barriers in North America.
"They're going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they no tariffs," Trump said at the White House on Monday.
He said there was "no room left" for a deal that would avert the tariffs by curbing fentanyl flows into the United States.
Trump also said reciprocal tariffs would take effect on April 2 on countries that impose duties on US products.
US stock indexes extended their losses after Trump's comments. The Dow Jones Industrial Average was down 1.58 per cent for the day, the S&P 500 was down 1.78 per cent and the Nasdaq Composite was down 2.47 per cent.
CEOs and economists say the action, covering more than $US900 billion ($A1.4 trillion) worth of annual US imports from its southern and northern neighbours would deal a serious setback to the highly integrated North American economy.
The tariffs are scheduled to take effect at one minute past midnight on Tuesday US time. At that point Canada and Mexico would face tariffs of 25 per cent, with 10 per cent for Canadian energy. Mexican officials did not immediately respond to requests for comment.
Canadian Foreign Minister Melanie Joly told reporters that Ottawa would be ready to respond. "There's a level of unpredictability and chaos that comes out of the Oval Office, and we will be dealing with it," she said.
Speaking on CNN, US Commerce Secretary Howard Lutnick said both countries had made progress on border security but needed to do more to curb fentanyl flows into the US to reduce deaths from the opioid drug.
Trump is also expected on Tuesday to raise fentanyl-related tariffs on Chinese imports to 20 per cent from 10 per cent currently, unless Beijing ends fentanyl trafficking into the US.
Lutnick did not mention any potential changes to these duties, which would affect about $US439 billion ($A704 billion) worth of annual imports.
Mexico, after avoiding the first round of Trump's tariffs by striking a last-minute deal to send thousands of troops to its northern border, has stepped up anti-drug efforts and hinted at new measures on imported Chinese goods.
President Claudia Sheinbaum, in a press conference on Monday before Trump made his remarks, said her government was calm as it awaited Trump's decision, but that Mexico but will respond if tariffs are imposed.
"We have a plan B, C, D," Sheinbaum said, without giving any details. She added that co-ordination with the US on trade and fentanyl trafficking has been "very good".
According to the Centers for Disease Control and Prevention, 72,776 people died from synthetic opioids in 2023 in the US, chiefly from fentanyl.
White House trade adviser Peter Navarro told CNBC on Monday that the inflationary impact from any tariffs would be "second-order small, so I don't see the president wavering on any of this, because he knows in order to get to a world in which America is strong and prosperous, with real wages going up and (more) factory jobs. This is the path that he's chosen."
