On Sunday, President Trump acknowledged that the tariffs imposed on Mexico, Canada, and China "may cause some pain" for Americans, a sentiment echoed by Wall Street and the United States' largest trading partners who expressed hopes for a swift end to the trade war.
The futures markets reacted with concern, opening lower as investors feared potential inflation and economic slowdown due to the tariffs, as warned by economists.
In defense of the tariffs, Trump, in his second term, justified the measures as necessary to combat illegal immigration and drug trafficking.
Canada and Mexico responded with retaliatory actions against the 25% tariffs imposed by Trump, likely impacting the interconnected economies of the three countries bound by trade agreements.
Meanwhile, China vowed to challenge the 10% tariffs at the World Trade Organization and to implement countermeasures.
Despite criticisms about the potential negative impact on global growth and increased prices for Americans, Trump stood by his decision, asserting the need to avoid being seen as a "Stupid Country."
While the trade move was supported by some North American companies, economists like EY's Greg Daco predicted adverse effects such as reduced U.S. economic growth and a risk of recession in Canada and Mexico, leading to potential "stagflation" domestically.
The market reaction was immediate, with U.S. crude oil futures rising but stock futures falling in response to the tariffs set to come into effect on Tuesday. Amidst the uncertainty, there was a glimmer of hope for negotiation, particularly with Canada and China.
Goldman Sachs economists suggested the tariffs might be temporary but raised concerns about the conditions for their removal set by the White House.
Trump vowed to maintain the tariffs until resolving what he described as a national emergency related to fentanyl and illegal immigration.
As tensions escalated, China and Mexico pushed back, while Canada announced plans to challenge the tariffs through international bodies and imposed counter-tariffs on a range of U.S. goods.
The tariff implementation marked a bold move by Trump, fulfilling a longstanding campaign promise with potential legal challenges and mixed perceptions from Americans.