Trump to talk to Canada, Mexico over tariffs

President Donald 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 on the European Union would go ahead, but did not say when. European leaders meet in Brussels on Monday and are expected to discuss tariffs in the wake of Trump's comments.

"It will definitely happen with the European Union. I can tell you that because they've really taken advantage of us," Trump told reporters on Sunday.

"They don't take our cars, they don't take our farm products. They take almost nothing and we take everything from them."

The tariffs on Canada, Mexico and China, outlined in three executive orders, are due to take effect 12:01 a.m. ET (0501 GMT) on Tuesday.

Tariffs to slow global growth

Economists said the Republican president's plan to impose 25% tariffs on Canada and Mexico and 10% tariffs on China - the United States' three largest trading partners - 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.

Financial market reaction on Monday reflected concerns about the fallout from a trade war. U.S. stock futures fell around 2%. Shares across Asia also slid around 2%. Chinese stocks listed in Hong Kong fell 0.8%, while the mainland China market was shut for Lunar New Year holidays.

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.

China to seek World Trade Organization's help

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.

Mexican President Claudia Sheinbaum, raising her fist in the air in a speech outside the capital, vowed resilience. She accused the United States of failing to tackle its fentanyl problem and said it would not be solved by tariffs.

Sheinbaum said she would provide more details on Monday of the retaliatory tariffs she ordered on the weekend.

Canada said on Sunday it will take legal action under the relevant international bodies to challenge the tariffs.

Prime Minister Justin Trudeau also encouraged Canadians on Sunday to boycott their longtime ally after ordering retaliatory tariffs against $155 billion of U.S. goods, from peanut butter, beer and wine to lumber and appliances.

Trump has heaped derision on Canada in particular, with calls for the country to become the 51st U.S. state. On Sunday, he said Canada "ceases to exist as a viable country" without its "massive subsidy."