Global markets were jolted Tuesday after President-elect Donald Trump said he would impose extra tariffs on products entering the U.S. from China, Canada and Mexico.
On Monday, Trump announced in two posts on his social media platform Truth Social that he would impose an additional 10 percent tariff on products from China entering America, and a 25 percent tariff on those entering from Canada and Mexico "until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!"
Markets in Asia dropped on the news, with both Japan's benchmark Nikkei 225 Index and China's Shanghai Composite closing lower. Meanwhile, the U.K.'s FTSE 100 opened down on the day before.
U.S. futures however were largely unchanged Tuesday morning ahead of markets opening in New York. Those tied to the S&P 500 Index, which tracks the performance of 500 of the largest companies listed on stock exchanges in the U.S., were up slightly.
Futures prices often reflect investor expectations for market performance before the stock market opens.
Trump's tariff announcement also hit currencies. The Mexican peso weakened further against the U.S. dollar Tuesday, and the Canadian dollar fell to its lowest level against its U.S. counterpart since 2020.
Billionaire hedge fund manager and Trump supporter Bill Ackman said on X, formerly Twitter, that the former and future president was using tariffs "as a weapon to achieve economic and political outcomes which are in the best interest of America, fulfilling his America first policy."
"To be clear," Ackman wrote, "according to Trump the 25% tariffs will not be implemented, or if implemented will be removed, once Mexico and Canada stop the flow of illegal immigrants and fentanyl into the U.S."
China and Mexico are the two countries trafficking the most fentanyl and fentanyl-related products into America, according to the Associated Press, per the U.S. Drug Enforcement Agency.
Trump has made similar announcements before. At a rally ahead of the election in November, the then-Republican nominee said, "Every damn thing that [Mexico] sell into the United States is going to have like a 25 percent [tariff] until they stop drugs from coming in. And let me tell you something, those drugs will stop so damn fast that your head will spin."
He also pledged a 60 percent blanket tariff on Chinese goods.
According to U.S. Census Bureau data, the U.S. imported $4 trillion in goods and services from across the globe, with China accounting for $433 billion of the total.
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