In a significant escalation of trade tensions, President Donald Trump’s tariffs on Canada and Mexico officially took effect early Tuesday morning, sending shockwaves through global markets and raising fears of economic retaliation from America’s closest neighbors.

As of midnight, all imports from Canada and Mexico are now subject to steep new tariffs—25% on most goods, with Canadian energy products facing a 10% tax. The Trump administration has also doubled tariffs on Chinese imports to 20%, triggering immediate retaliation from Beijing. In response, China has imposed tariffs of up to 15% on American farm exports and expanded restrictions on U.S. companies operating in the country.

According to the Associated Press, Canadian Prime Minister Justin Trudeau swiftly condemned the tariffs and announced that Canada would impose its own countermeasures on over $100 billion worth of American goods within three weeks. Mexico has yet to reveal its response, but economic experts warn that the impact could be severe.

Despite widespread concerns from economists and global leaders about rising inflation and a looming trade war, President Trump remains steadfast, stating that tariffs are the best tool for ensuring national prosperity.

As fears of economic fallout mount, experts caution that American consumers and businesses could soon feel the effects of these trade disputes, particularly small businesses reliant on imports from Canada, Mexico, and China. In the Capital Region, small business owners who sell through platforms like Amazon worry that the increased costs will put them out of business.