The US will press ahead with steep tariffs on Canada and Mexico from Tuesday, Donald Trump has said, setting the stage for a trade war with his country’s two largest economic partners.

Hours before his administration was due to hit America’s closest neighbors with sweeping import duties, the US president claimed there was “no room left” for a deal to avoid their imposition. The announcement led to a sharp sell-off on Wall Street.

All Mexican exports to the US are set to face a levy of 25% under the plans. Most Canadian exports will face a 25% tariff, with energy products facing a 10% duty.

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The action is set to prompt swift retaliation. “We’re ready,” said the Canadian foreign minister, Mélanie Joly.

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