Financial markets sold off around the world as President Trump imposed steep tariffs on virtually every country except for Canada and Mexico. The two members of the U.S.-Mexico-Canada Agreement did not escape unscathed, though, since they are already subject to 25% tariffs on steel and aluminum products, as well as on any traded goods that do not comply with USMCA rules (with exceptions as explained below).

For all other countries, a tariff of 10% on all goods (with some exceptions) is in effect, and for many countries, higher “reciprocal” tariffs as high as 50% replace the 10% duties.

The new tariffs apply to the vast majority of traded goods, but there is a list of exempt products. For the most part, these are either products which the administration expects to hit with national-security tariffs in the near future – including copper, pharmaceuticals, semiconductors and lumber – or strategically important goods such as rare earths.

Canada and Mexico, for the moment, will be paying zero duties on USMCA-compliant products, but 25% on the portion of cross-border trade – not an insignificant amount – that fails to comply. However, energy and potash that do not comply with USMCA will only pay 10%. The threat hanging over both countries is across-the-board 25% duties, which have been suspended twice.

The multi-day stock market selloff reflects, in part, investors’ fears that other countries will retaliate. China has already imposed a 34% tariff on all U.S. goods, a measure that is likely to boost South American agricultural exports as the southern hemisphere harvest kicks in.

Beyond reciprocal tariffs, Trump also announced 25% tariffs on imported cars and auto parts. This applies only to the non-U.S. content of cars from Mexico and Canada, but to the entire value of imports from other origins. Although the administration has stated that it wants to increase imports of eggs, the list of tariff-exempt goods does not include eggs or egg products.