President Trump ignited a full-blown trade war between the U.S. and its top trading partners, with Mexico, Canada and China all slapping new retaliatory tariffs on U.S. goods.
Trump's new 25 percent tariffs on Canada and Mexico went into effect at midnight. He also doubled the tariffs on goods from China, raising them from 10 percent to 20 percent.
Here's how foreign leaders responded:
• Canadian Prime Minister Justin Trudeau announced 25 percent tariffs on more than $20 billion of U.S. goods, with about $80 billion more scheduled to kick in later this month. Ontario responded by halting the sale of U.S.-made alcohol.
"Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs," Trudeau said. "Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term."
• Mexican President Claudia Sheinbaum will announce retaliatory tariffs Sunday.
• China imposed additional tariffs of up to 15 percent on some U.S. goods and will restrict exports to more than a dozen U.S. companies, with an emphasis on U.S. farm exports.
Trump's Commerce Secretary Howard Lutnick said the tariffs are part of a "drug war" not a "trade war," with the aim being to reduce the flow of illegal drugs into the U.S. He said reductions in the flow of fentanyl could lead to an end of the trade war.
The markets responded negatively, with economists warning the trade war will lead to higher prices for consumers, choke the economy and lead to "stagflation" — a period of slow growth and high inflation.
The Dow dropped by triple digits for a second consecutive day.
Billionaire investor Warren Buffett called the tariffs "an act of war."
Moody's chief economist Mark Zandi called the tariffs a "tax on American consumers" that would add about $1,250 in expenses for the average American over the course of the year.
A top adviser at the International Chamber of Commerce warned the world economy could crash like it did during the Great Depression.
U.S. business are caught in the crossfire, with executives expecting the prices of some goods to rise sharply. Target warned that higher prices are on the way.
The tariffs were denounced from nearly every corner of the ideological spectrum.
"US tariffs inevitably bring Canadian, Mexican, and Chinese tariffs which means higher prices for lumber, steel, aluminum and more expensive homes and cars," Sen. Rand Paul (R-Ky.) posted on X.
Senate Majority Leader John Thune (R-S.D.) said he hopes the tariffs are temporary.
"I think the president is looking at this as a means to an end. I don't think it's the end itself – I certainly hope it isn't," he told CNN.
However, the United Auto Workers union praised the tariffs, calling them "a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals."
This comes as the Atlanta Federal Reserve altered its projection for a contraction of the nation's gross domestic product from negative 1.5 percent in the first quarter to negative 2.8 percent.
Trump was transparent over the course of the campaign about his intention to use tariffs as a bargaining tool to bring manufacturing to the U.S., but polls show deep concern over the trade war and direction of the economy.
The latest Marist survey found 46 percent believe the direction of the economy is changing for the worse, as opposed to 42 percent who believe it's changing for the better.
CNN polling analyst Harry Enten noted that presidents traditionally hold high marks on the economy heading into their first address to Congress, with the average president 15 points positive. Trump is currently at 4 points negative on the economy, according to CNN's model.
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