• Donald Trump said he would impose 25% tariffs on Canadian and Mexican exports to the US.
• The US is a big buyer of products from Canada and Mexico, particularly in the energy and auto sectors.
• Canadian energy exports to the US were worth $128 billion last year.

Donald Trump took aim Monday at three of America's biggest trading partners, announcing plans for tariffs on imports from China, Mexico, and Canada.

The US received 83% of Mexico's exports and 75% of Canada's exports last year, official data shows. Mexico sent $379 billion worth of exports to the US in the first nine months of this year, with Canadian exports topping $309 billion, the data shows.

Investors reacted to Trump's latest tariff threats by betting on the greenback and paring their exposure to vulnerable assets. The US dollar strengthened against both the Canadian dollar and the Mexican peso. US stocks broadly gained Tuesday while indexes in Europe and Asia retreated.

"Investors should prepare for immediate volatility in sectors such as automotive, technology, and agriculture — industries deeply intertwined with trade agreements and foreign markets," Nigel Green, the CEO of deVere Group, said in a Tuesday note.

Some commentators were skeptical whether the incoming president would enact the tariffs, suggesting he might be rattling his saber to secure better trade terms.

The tough talk might be a "negotiating tactic, a threat rather than a promise," Dan Coatsworth, an investment analyst at AJ Bell, said in a morning note. "That might still end up the case, but it's clear that the president-elect has no intention of backing down for now."

Even so, here are some Canadian and Mexican industries that could be affected by Trump's new tariffs.

Energy

Canada is the top supplier of crude oil to the US.

It sold mineral fuels, oils, and distillation products worth $128 billion to the US last year, which accounted for nearly one-third of its total exports to the country, Trading Economics data shows.

Tariffs stand to make energy products more expensive, raising overall inflation and eroding consumers' spending power.

Wilbur Ross, who served as commerce secretary in Trump's first administration, told CBC earlier this month he didn't expect Trump to tax Canadian energy imports.

"We import a lot of energy from Canada. I can't imagine that the president would want to tax that, because all it would do would be to raise our costs and not help anything with more American jobs," Ross said.

Several Toronto-listed energy stocks fell on Tuesday morning. Canadian Natural Resources slid 3%, Suncor Energy and Arc Resources slipped 2%, and Imperial Oil and Tourmaline Oil dipped 1%.

Autos

Both Canada and Mexico send a substantial number of vehicles to the US, with auto exports worth $58 billion and $112 billion, respectively, in 2022, per Trading Economics data.

Mexico is an auto powerhouse. The industry employs more than 1 million people there and has long attracted equipment and parts makers that serve it.

The country exported 255,910 cars in October to the US, a 7.5% increase from the previous year, per official data — just over three-quarters of Mexico's total auto exports.

Automakers with operations in Mexico include Toyota, Nissan, and Honda. Tesla announced plans in 2023 for a new factory south of the border that is now in limbo, and the tariffs could complicate matters for Elon Musk's company.

Tesla's Chinese rival BYD is also planning a factory in Mexico, but Mexican officials fear it could anger Trump, The Wall Street Journal reported Tuesday.

Auto stocks fell Tuesday with GM down 7%, Stellantis 5% lower, Honda down 3%, Ford and Volkswagen both shedding 2%, and Mercedes-Benz and BMW both off about 1%.

Machinery and more

Both Canada and Mexico count machinery as one of their largest export categories to the US. Canada exported $34 billion worth of "machinery, nuclear reactors, boilers" in 2023, while Mexico shipped goods worth $91 billion in that category the previous year, per Trading Economics.

Industrial and manufacturing stocks dropped on Tuesday with Carrier Global and Xylem down 3%, ASML and SPX Technologies down 2%, and nVent Electric and ESAB down 1%.

Beyond energy, vehicles, and machinery, Canada exports commodities, plastics, electronics, and other goods worth tens of billions of dollars to the US annually.

Mexico exports similar amounts of electrical and technical equipment, furniture, plastics, food, and beverages across its northern border.