US President Donald Trump said he will discuss the punishing tariffs he has levied on Canada and Mexico with both countries on Monday, as markets sank on fears over the impact on the global economy.

The 25 percent duties — footed by American companies importing from Mexico and Canada — sent European and Asian stocks slumping at the open Monday.

The Mexican peso and Canadian dollar also sank against the greenback, while oil jumped despite Trump placing the levy on Canada's energy imports at 10 percent to limit a spike in fuel prices.

Besides the US neighbors, Trump also hit China with a 10 percent tariff in addition to existing levies. 

Trump told reporters after flying back to Washington Sunday evening from a weekend in Florida that he was "speaking with Prime Minister (Justin) Trudeau tomorrow morning, and I'm also speaking with Mexico tomorrow morning."

China, Mexico and Canada are the top three US trade partners and have all vowed to retaliate when the tariffs take effect Tuesday.

Trump, a fervent supporter of tariffs, had always maintained that their impact would be borne by foreign exporters without being passed on to American consumers, contradicting the opinion of a broad range of experts.

However, the Republican acknowledged Sunday that Americans might feel economic "pain."

"But we will Make America Great Again, and it will all be worth the price that must be paid," Trump wrote in all-caps on his Truth Social media platform.

Analysts expect the trade war to slow US growth and increase prices — at least in the short term — something the president had resisted acknowledging, with frustration over rising costs seen as a major factor in his 2024 election win.

The tariffs "will immediately weigh on the US growth outlook... and prevent the US dollar from fully benefiting from Trump's America First Policies," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

"Instead, the US could end up in a less appetizing America Alone setting."

John Plassard, investment specialist at Swiss asset manager Mirabaud, said: "Investors fear that this trade war will result in a significant deterioration in the global economy."

Trump has cited illegal immigration and the trafficking of the deadly opioid fentanyl as reasons for the "emergency" measures.

But he also expressed general outrage on Sunday at trade deficits, which he has long viewed as signs of unfair treatment against the United States.

"We're not going to be the 'Stupid Country' any longer," he said.

'51st state'

Trump took particular aim at Canada in a separate social media post, repeating his call for America's northern neighbor to become a US state.

Claiming the United States pays "hundreds of billions of dollars to SUBSIDIZE Canada," Trump said that "without this massive subsidy, Canada ceases to exist as a viable Country."

"Therefore, Canada should become our Cherished 51st State," he said, reiterating the expansionist threat against one of the United States' closest allies.

The US Census Bureau says the 2024 trade deficit in goods with Canada was $55 billion.

Canadian backlash was swift, with video posted to social media showing fans booing when the US national anthem was sung during a basketball game between the Toronto Raptors and the Los Angeles Clippers.

Trudeau vowed Saturday to hit back with 25 percent levies on select American goods worth Can$155 billion ($106.6 billion), with a first round Tuesday followed by a second in three weeks.

The White House has not publicly announced what actions could end the tariffs.

"We're obviously open to any other suggestions that come our way," Canada's ambassador to the United States Kirsten Hillman told ABC News on Sunday.

Mexican President Claudia Sheinbaum said she was also awaiting Trump's response to her proposal for dialogue. She said she had directed her economy minister to "implement Plan B," which includes unspecified "tariff and non-tariff measures."

'No winners'

Trump also indicated that while he would not immediately impose tariffs on Britain, it would "definitely happen with the European Union" — a threat to which the bloc said it would "respond firmly."

There are "no winners in trade wars," Kaja Kallas, the EU's top diplomat in Brussels, warned Monday. "We need America, and America needs us as well."

The tariff announcements capped an extraordinary second week of Trump's new term. The United States is still reeling from its worst aviation disaster in years, the collision of an army helicopter and an airliner that killed 67 people in the US capital.

His administration has also moved to drastically overhaul the government with the help of the so-called Department of Government Efficiency, which Trump has tasked billionaire Elon Musk with running to slash federal spending.

by Aurélia End with Daniel Stublen in Washington