No backing down: Trump will levy 25% tariffs on Canada and Mexico beginning Tuesday

President Trump said he’ll follow through with 25% tariffs on imported goods from Mexico and Canada beginning Tuesday and will double tariffs on goods from China to 20%.

“The tariffs — they’re all set. They go into effect tomorrow,” Mr. Trump told reporters Monday.

Mr. Trump said he’ll go through with the tariffs after unveiling a deal with Taiwan Semiconductor Manufacturing Company (TSMC), which plans to invest at least $100 billion in five semiconductor chip factories in the U.S., mainly in Arizona, to avoid the looming tariffs.

“The most powerful AI chips in the world will be made right here in America,” Mr. Trump said. “We will be at close to 40% of the market with this transaction and a couple of others that we are doing.” 

Mr. Trump’s decision to move forward with the tariffs sent the Dow Jones Industrial Average tumbling 650 points at the closing bell as economists warn the additional duty on foreign goods would hike consumer prices and shrink economic growth.

Mr. Trump insisted the opposite, touting the TSMC deal as proof that the tariffs will bring back revenue and manufacturing jobs that the U.S. lost from decades of trade imbalances with other countries.

He said the semiconductor deal will bring up to 25,000 jobs.

Hours before Mr. Trump disclosed the semiconductor deal, Honda announced it will manufacture its new Civic hybrid in Indiana, moving the work from Mexico to the U.S. to dodge Mr. Trump’s 25% tariff on Mexican goods that is set to begin at midnight Monday.

“Tariffs are easy, they are fast, they are efficient and they bring fairness,” Mr. Trump said.

Retaliation against the new tariffs could begin quickly. 

Ontario Premier Doug Ford on Monday vowed to stop electricity exports into the United States if the tariffs go through, the Toronto Sun reported.  

The United States and Canada share an integrated power grid and Canada is the largest source of U.S. energy imports. Ontario exports electricity to 30 states, among them Michigan, Minnesota and New York. 

“They rely on our energy, they need to feel the pain. They want to come at us hard, we’re going to come back twice as hard,” Mr. Ford said.

Mr. Trump promised additional tariffs on April 2 for agricultural imports, telling U.S. farmers in a social media post there will be increased demand for domestic farm products.

“Get ready to start making agricultural product to be sold INSIDE the United States,” Mr. Trump posted on Truth Social. “Tariffs will be on external product on April 2. Have fun!”

Mr. Trump has pledged reciprocal tariffs on European Union nations that impose tariffs on U.S. goods.

The president initially threatened the Canada and Mexico tariffs in response to fentanyl pouring over the southern border and to a much lesser extent over the northern border. He paused the tariffs in February after both countries announced plans to beef up border security and anti-drug trafficking measures. But now he’s moving ahead with them.

As Mr. Trump announced plans to move ahead with the tariffs on goods from Mexico and Canada, his official rapid response team posted on social media that Fentanyl killed 70,000 people in the U.S. last year. Much of the drug is produced in Mexico with chemicals bought mostly from China and trafficked into the U.S. by powerful Mexican cartels.

“No room left,” for Canada, Mexico or China to escape Tuesday’s tariffs, Mr. Trump said, citing fentanyl.

He is also eager to equalize the U.S. trade with Canada and Europe. He complained the U.S. is treated unfairly by other countries when it comes to trade policy.

Canada imposes steep tariffs on many U.S. goods including dairy and other agricultural products, lumber, metals and shoes.

The European Union has imposed significant tariffs on U.S. goods, including automotive products, motorcycles, plastics and aircraft.

“The United States has been taken advantage of for 40 years,” Mr. Trump said. “The United States has been a laughing stock for years and years.”

The tariffs have attracted significant criticism from economists and tax analysts who say it will eat into paychecks and harm economic growth.

Erica York, the Tax Foundation’s vice president of federal tax policy, said the China, Mexico and Canada tariffs amount to a $130 billion annual tax increase on Americans, or about $1,000 per household, and will reduce incomes by 1.2% this year.

Car prices could skyrocket, up by $12,000 by some estimates, because parts are manufactured in Mexico and Canada.

“What they are going to have to do is build their car plants and other things in the United States,” Mr. Trump said. “In which case you have no tariffs. They are much better off building here. We have the market where they sell the most.”