Washington: US President Donald Trump said that 25 per cent tariffs on goods from Mexico and Canada will be implemented starting Tuesday, pushing North America closer to a regional trade war.

"They're going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs," Trump said at the White House.

Trump's comments made on Monday triggered a selloff in global stocks and pushed bond yields lower. The Mexican peso and Canadian dollar both fell following his remarks.

He said there was "no room left" for a deal that would avert the tariffs by curbing fentanyl flows into the United States. Trump also reaffirmed that he will increase tariffs on all Chinese imports to 20 per cent from the previous 10 per cent levy to punish Beijing for failing to halt shipments of fentanyl to the US. The president said in an order that China "has not taken adequate steps to alleviate the illicit drug crisis."

CEOs and economists say Trump's tariffs on Canada and Mexico, covering more than $900 billion worth of annual US imports, will deal a serious setback to the highly integrated North American economy.

The tariffs are scheduled to take effect at 12:01 am EST (10:31 pm Indian time) on Tuesday, the Trump administration confirmed in Federal Register notices. At that point, the US Customs and Border Protection agency will begin collecting 25% on Canadian and Mexican goods, with a 10% duty for Canadian energy. The additional Chinese tariffs will also kick in at that deadline.

Canada said it would retaliate with 25% tariffs on C$155 billion ($107 billion) worth of US goods if Trump's tariffs went into effect, Prime Minister Justin Trudeau said Monday evening, and urged the White House to reconsider. Trudeau said Canadian tariffs will go into effect for C$30 billion of products at the same time as US tariffs on Tuesday, while duties on the remaining C$125 billion of US goods will apply in 21 days.

"Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures," Trudeau said in a statement.

Mexico's economy ministry said that there would be no public response until President Claudia Sheinbaum's regular morning press conference on Tuesday. She has vowed to respond, saying: "We have a plan B, C, D."

China's commerce ministry on Tuesday vowed countermeasures against Washington's decision and urged the US to "immediately withdraw" its tariffs, which it described as "unreasonable and groundless, harmful to others." The state-backed Global Times newspaper earlier said Beijing's countermeasures would most likely target US agricultural and food products.

Representative Suzan DelBene, a Democrat from the state of Washington, said the decision to proceed with tariffs on Canada and Mexico would cost American families thousands of dollars at the grocery store, gas station and pharmacy counter.

"No president should be able to raise taxes without a vote in Congress," she said in a statement.

White House trade adviser Peter Navarro, however, said on Monday that the inflationary impact from any tariffs would be "second-order small" and that he did not expect the president to waver on the measures. "This is the path that he's chosen," Navarro told CNBC.

Trump on Saturday added another trade action to a cascade of tariff announcements over the past month, opening a national security investigation into imports of lumber and wood products that could result in steep tariffs. Canada, already facing 14.5% US tariffs on softwood lumber, would be hit particularly hard.

During the prior week, Trump ordered the revival of a tariff probe on countries that levy digital services taxes, proposed fees of up to $1.5 million every time a Chinese-built ship enters a US port and launched a new tariff investigation into copper imports.

These come on top of his plans for higher US "reciprocal tariffs" to match tariff rates of other countries and offset their other trade barriers, a move that could hit the European Union hard over the value added taxes member states charge.

But Trump's "tariffs on steroids" may keep inflation higher and could tip the global economy into recession, warned Desmond Lachman, a senior fellow at the conservative American Enterprise Institute.