President Donald Trump vowed Tuesday to keep up his campaign of “swift and unrelenting action” in reorienting the nation’s economy, immigration and foreign policy in an unyielding address to Congress and the nation that left Democratic legislators to register their dissent with stone faces, placards calling out “lies,” and one legislator’s ejection.
Trump’s prime-time speech was the latest marker in his takeover of the nation’s capital, where the Republican-led House and Senate have done little to restrain the president as he and his allies work to slash the size of the federal government and remake America’s place in the world.
The more than 90-minute address added up to a defiant sales pitch for the policies that he promised during his campaign and leaned into during his first weeks back in office. Trump pledged to keep delivering sweeping changes to the country, rescuing it from what he described as destruction and mistakes left by his predecessor while repeatedly needling Democratic lawmakers who protested his remarks.
Emboldened after overcoming impeachments in his first term and criminal prosecutions in between his two administrations and with a tight grip on the Republican-controlled Congress, Trump has embarked on a mission to dismantle parts of the federal government, remake the relationship with America’s allies and spark a North American trade war that is compounding economic uncertainty.
“It has been nothing but swift and unrelenting action,” Trump said of his opening weeks in office. “The people elected me to do the job, and I am doing it.”
Trump, who has billionaire adviser Elon Musk orchestrating his efforts to slash the size and scope of the federal government, said he is working to “reclaim democracy from this unaccountable bureaucracy” and threatened federal workers anew with firings if they resist his agenda.
Musk, who was seated in the House gallery, received a pair of standing ovations from Republicans in the chamber, as Trump exaggerated and shared false claims about alleged government abuse uncovered by the Tesla and SpaceX founder and his team of disrupters.
Trump repeated false claims that tens of millions of dead people over 100 years old are receiving Social Security payments, prompting some Democrats to shout, “Not true!” and “Those are lies!”
Trump spoke at a critical juncture in his presidency, as voters who returned him to the White House on his promise to fix inflation are instead finding economic chaos. All the gains the S&P 500 have made since Election Day are now gone, while consumer sentiment surveys show the public sees inflation as worsening. For a president who believes that announcements of corporate investments can boost attitudes about the economy, the speech was suddenly a test of his ability to rebuild confidence in his economic leadership.
Trump seemed prepared to double down on his trade war, which experts have warned will raise prices for consumers.
“Whatever they tariff us, we tariff them. Whatever they tax us, we tax them,” Trump said. He sought to ease concerns about price increases, saying, “There’ll be a little disturbance, but we’re okay with that. It won’t be much.”
Trump said one of his “very highest priorities” was to rescue the economy and offer relief to working families. He promised to organize the federal government to lower costs on eggs and energy, blaming his Democratic predecessor Joe Biden for the situation and offering scant details of his own plans.
Trump also called for the extension of his first-term tax cuts and additional federal funding for his border crackdown, including for his promised efforts at “mass deportation” of people in the U.S. illegally.
Speaking about his promised tax cuts, Trump seemed to goad Democrats, saying: “I’m sure you’re going to vote for those tax cuts. Because otherwise I don’t believe the people will ever vote you into office.”
The backdrop was the new economic uncertainty unleashed after the president opened the day by placing stiff tariffs on imports from the country’s neighbors and closest trading partners. A 25% tax on goods from Canada and Mexico went into effect early Tuesday — ostensibly to secure greater cooperation to tackle fentanyl trafficking and illegal immigration — triggering immediate retaliation and sparking fears of a wider trade war. Trump also raised tariffs on goods from China to 20%.
Trump also celebrated his sharp crackdown on migration to the U.S., fulfilling a key campaign promise and taunting Democrats for not doing more to secure the border, saying, “It turns all we really needed was a new president.”
Republicans were boisterous as Trump stepped to the lectern in the House, chanting “USA! USA!” as the president basked in the cheers. The GOP lawmakers were jubilant, having won a trifecta of the White House, Senate and House in the elections. However, they face a high-stakes task of delivering on Trump’s agenda as well as avoiding a government shutdown later this month.
Across the aisle, out-of-power Democrats set the tone early, with most remaining seated without applauding or making eye contact with Trump as he was introduced in the chamber.
After several interruptions, House Speaker Mike Johnson jumped in and called for decorum to be restored in the chamber as Republicans shouted “USA” to drown out the cries from the other side of the aisle. Johnson then ordered Texas Rep. Al Green removed from the chamber.
“It’s worth it to let people know that there are some people who are going to stand up” to Trump, Green told reporters after being thrown out of the chamber.
Other Democrats held up signs criticizing like “Save Medicaid” and “Protect Veterans” during Trump’s remarks, seeking to drive public awareness to elements of Trump’s agenda they believed might offer them a pathway back to the majority.
Some Democrats chose to highlight the impact of Trump’s actions by inviting fired federal workers as guests, including a disabled veteran from Arizona, a health worker from Maryland and a forestry employee who worked on wildfire prevention in California. They also invited guests who would be harmed by steep federal budget cuts to Medicaid and other programs.
Trump also used his speech to address his proposals for fostering peace in Ukraine and the Middle East, where he has unceremoniously upended the policies of the Biden administration in a matter of just weeks. On Monday, Trump ordered a freeze to U.S. military assistance to Ukraine, ending years of staunch American support for the country in fending off Russia’s invasion.
Many Democratic lawmakers wore blue and yellow ties and scarves in a show of support for Ukraine.
Trump also said he had ended a “weaponized government” that he accused Democrats of wielding against him, referring to his legal troubles over the years, claiming they were political persecution.
The president also used his high-profile moment to press his efforts to reshape the country’s approach to social issues, as he looked to continue to eradicate diversity, equity and inclusion efforts across the country and to roll back some public accommodations for transgender individuals.
Trump said he ended the “tyranny” of diversity, equity and inclusion policies that he rolled back for the federal government and military, along with pushing similar moves in the private sector. “Our country will be woke no longer,” he declared.
Watching from the gallery with first lady Melania Trump were guests including 15-year-old Elliston Berry, of Aledo, Texas, who was the victim of an explicit deepfake image sent to classmates.
Other White House guests included Stephanie Diller, the widow of New York Police Department Officer Jonathan Diller, who was killed in the line of duty during a traffic stop in March 2024; Marc Fogel, the Pennsylvania teacher who came home last month after years of detention in Russia, and his 95-year-old mother, Malphine; and relatives of Corey Comperatore, the former Pennsylvania fire chief who was killed as he protected his family during an assassination attempt on Trump last summer.
The IRS is drafting plans to cut its workforce by as much as half through a mix of layoffs, attrition and incentivized buyouts, according to two people familiar with the situation.
The people spoke Tuesday on condition of anonymity because they weren’t authorized to disclose the plans.
The layoffs are part of the Trump administration’s efforts to shrink the size of the federal workforce through billionaire Elon Musk’s Department of Government Efficiency by closing agencies, laying off nearly all probationary employees who have not yet gained civil service protection and offering buyouts to almost all federal employees through a “deferred resignation program” to quickly reduce the government workforce.
A reduction in force of tens of thousands of employees would render the IRS “dysfunctional,” said John Koskinen, a former IRS commissioner.
The federal tax collector employs roughly 90,000 workers total across the United States, according to the latest IRS data. People of color make up 56% of the IRS workforce, and women represent 65%.
Already, roughly 7,000 probationary IRS employees with roughly one year or less of service were laid off from the organization in February.
The organization also offered IRS employees — along with almost all federal employees across the government — “deferred resignation program” buyouts, though IRS employees involved in the 2025 tax season were told earlier this month that they would not be allowed to accept a buyout offer from the Trump administration until mid-May, after the taxpayer filing deadline.
In addition to the planned layoffs, the Trump administration intends to lend IRS workers to the Department of Homeland Security to assist with immigration enforcement. In a letter sent in February, DHS Secretary Kristi Noem asked Treasury Secretary Scott Bessent to borrow IRS workers to help with ongoing immigration crackdown efforts.
Koskinen and six other former IRS Commissioners wrote in the New York Times earlier this month: “Aggressive reductions in the I.R.S.’s resources will only render our government less effective and less efficient in collecting the taxes Congress has imposed.”
According to a White House memo sent to federal agencies in late February, agencies are to develop a report by March 13 on its reduction in force plans — but it is unclear whether the White House will approve the IRS’ reorganization plan and over what period of time it would be implemented.
Representatives for the White House, the Treasury Department and IRS did not respond to an Associated Press request for comment. The New York Times first reported the deliberations.
President Donald Trump launched a trade war Tuesday against America’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin as the U.S. faced the threat of rekindled inflation and paralyzing uncertainty for business.
Just after midnight, Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%.
Beijing retaliated with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.
In an address to Congress Tuesday night, Trump repeated two different explanations for his tariffs on Canada and Mexico. He cited the trade deficits the U.S. has with both countries, but also said, “they’ve allowed fentanyl to come into our country at levels never seen before, killing hundreds of thousands of our citizens.”
Trump also acknowledged there could be “a little disturbance” from the tariffs, a possible nod to the stock market’s sharp falls in the past two days as well as concerns about inflation.
“It may be a little bit of an adjustment period,” he said after claiming that farmers would benefit from reciprocal tariffs on countries that have tariffs on U.S. exports. “You have to bear with me again and this will be even better.”
Canadian Prime Minister Justin Trudeau said his country would plaster tariffs on over $100 billion (U.S. dollars) of American goods over the course of 21 days.
“Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” Trudeau said.
Later in the day, Commerce Secretary Howard Lutnick said the U.S. would likely meet Canada and Mexico “in the middle,” with an announcement coming as soon as Wednesday.
Lutnick told Fox Business News that the tariffs would not be paused, but that Trump would reach a compromise.
“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick said.
A Canadian senior government official said Lutnick called Ontario Premier Doug Ford after Ford’s press conference and asked him to stand down. The official, who spoke on condition of anonymity because they were not authorized to speak publicly about the call, said Ford told the U.S. commerce secretary he’ll go harder.
The official said Lutnick told Ford that Trudeau’s “very dumb” comment and remarks by other Canadian officials were not helpful, but said Lutnick seemed to acknowledge the tariffs are a part of negotiation toward a trade deal.
A senior Canadian official said Trudeau told the premiers of Canada’s provinces that he hopes to speak to Trump on Wednesday. The official spoke on condition of anonymity because they were not authorized to speak publicly about the call.
Mexican President Claudia Sheinbaum said Mexico will respond to the new taxes with its own retaliatory tariffs. Sheinbaum said she will announce the products Mexico will target on Sunday. The delay might indicate that Mexico still hopes to de-escalate Trump’s trade war.
China indicated on Tuesday night that it would not back down.
“If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end,” China’s embassy to the United States posted on X.
The president is abandoning the free trade policies the United States pursued for decades after World War II. He argues that open trade cost America millions of factory jobs and that tariffs are the path to national prosperity. He rejects the views of mainstream economists who contend that such protectionism is costly and inefficient.
Import taxes are “a very powerful weapon that politicians haven’t used because they were either dishonest, stupid or paid off in some other form,” Trump said Monday. “And now we’re using them.”
Dartmouth College economist Douglas Irwin, author of a 2017 history of U.S. tariff policy, has calculated that Tuesday’s hikes will lift America’s average tariff from 2.4% to 10.5%, the highest level since the 1940s. “We’re in a new era for sure.”
As the trade disputes escalated, stocks racked up more losses Tuesday on Wall Street, wiping out all the gains since Election Day for the S&P 500. Markets in Europe also fell sharply.
The American president has injected a disorienting volatility into the world economy, leaving it off balance as people wonder what he will do next.
During his first term, Trump imposed tariffs only after lengthy investigations — into the national security implications of relying on foreign steel, for example, said Michael House, co-chair of the international trade practice at the Perkins Coie law firm.
But by declaring a national emergency involving the flow of immigrants and illicit drugs across U.S. borders, “he can modify these tariffs with a stroke of the pen,’’ House said. “It’s chaotic.”
Democratic lawmakers were quick to criticize the tariffs.
“Presidents don’t get to invent emergencies to justify bad policies,” said Rep. Gregory Meeks, the top Democrat on the House Foreign Affairs Committee. “Abusing emergency powers to wage an economic war on our closest allies isn’t leadership — it’s dangerous.”
Even some Republican senators raised alarms. “Maine and Canada’s economy are integrated,” said Sen. Susan Collins, R-Maine, explaining that much of the state’s lobsters and blueberries are processed in Canada and then sent back to the U.S.
Truck driver Carlos Ponce, 58, went about business as usual Tuesday morning, transporting auto parts from Ciudad Juarez, Mexico, to El Paso, Texas, just as he’s done for decades.
Like many on the border, he was worried about the fallout from the tariffs. “Things could change drastically,” Ponce said. Truckers could lose their jobs or have to drive farther to coastal ports as Mexican manufacturers look for trading partners beyond the U.S.
Alan Russell, head of Tecma, which helps factories set up in places like Ciudad Juarez, is skeptical that Trump’s tariffs will bring manufacturing back to the United States.
“Nobody is going to move their factory until they have certainty,” Russell said. Just last week, he said, Tecma helped a North Carolina manufacturer that moved to Mexico because it couldn’t find enough workers in the United States.
U.S. businesses near the Canadian border scrambled to deal with the impact. Gutherie Lumber in suburban Detroit reached out Tuesday to Canadian suppliers about the cost of 8-foot wood studs. About 15% of the lumber at the Gutherie yard in Livonia, Michigan, comes from Canada.
Sales manager Mike Mahoney said Canadian suppliers are already raising prices. “They’re putting that 25% on studs.’' Builders will strain to stay within their budgets.
After years of effort and thousands of dollars in investment, Tom Bard, a Kentucky craft bourbon distiller, gained a foothold in the Canadian provinces of British Columbia and Alberta and watched his sales grow north of the border. Now Kentucky bourbon is in Canada’s crosshairs, and an order from his Canadian distributors is on hold.
“That hurts,” he said. At his small distillery “every single pallet that goes out the door makes a huge difference ... The last thing you want is to have an empty spot where your bottles are supposed to be on a shelf.”
Bard co-owns the Bard Distillery with his wife, Kim, in western Kentucky’s Muhlenberg County, about 135 miles (217 kilometers) southwest of Louisville, Kentucky.
Trump overwhelmingly carried Kentucky in the November election. In Muhlenberg County, Trump defeated Kamala Harris by a more than 3-to-1 margin.
The China tariffs also threaten the U.S. toy industry. Greg Ahearn, president and CEO of the Toy Association, said the 20% tariffs on Chinese goods will be “crippling,” as nearly 80% of toys sold in the U.S. are made in China.
Rachel Lutz owns the Peacock Room, four women’s boutique shops with about 15 employees in Detroit. She’s been bracing for the tariffs but doesn’t understand the logic behind them.
“I’m struggling to see the wisdom in picking a fight with our largest trading partner that we’ve had historically wonderful relationships with,” Lutz said Tuesday from her shop. “I’m struggling to really understand how they can’t see that will profoundly impact our economy in ways that I think the American consumer has not predicted. We’re about to find out.”
Canadian Prime Minister Justin Trudeau on Tuesday called American tariffs “very dumb” and said that U.S. President Donald Trump is appeasing Russia while launching a trade war against Canada.
In a blunt news conference during his final days in office, Trudeau said that Canada would plaster retaliatory tariffs on more than $100 billion of American goods in response to Trump’s 25% tariffs.
“Today the United States launched a trade war against Canada, their closest partner and ally, their closest friend. At the same time, they are talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” a visibly angry Trudeau said.
Trump imposed tariffs against Washington’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin. Just after midnight, Trump put 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy.
“What he wants to see is a total collapse of the Canadian economy because that will make it easier to annex us,” Trudeau said. “That is never going to happen. We will never be the 51st state.”
Trudeau addressed Trump directly by his first name.
President Donald Trump launched a trade war Tuesday against America’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China.
“I want to speak directly to one specific American, Donald,” Trudeau said. “It’s not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you’re a very smart guy, this is a very dumb thing to do.”
Later Tuesday, U.S. Commerce Secretary Howard Lutnick said the U.S. would likely meet Canada and Mexico “in the middle,” with an announcement coming as soon as Wednesday.
Lutnick told Fox Business News that the tariffs would not be paused, but that Trump would reach a compromise.
“I think he’s going to figure out, you do more, and I’ll meet you in the middle in some way,” Lutnick said.
A senior government official said Trudeau told the premiers of Canada’s provinces in a call Tuesday afternoon that he hopes to speak to Trump on Wednesday. The official spoke on condition of anonymity because they were not authorized to speak publicly about the call.
In a post on Truth Social earlier Tuesday, Trump said: “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!”
Trump has threatened Canada’s sovereignty, provoking anger in the country. Canadian hockey fans have been booing the American national anthem at recent NHL and NBA games. Trudeau channeled the betrayal that many Canadians are feeling.
“Canadians are hurt. Canadians are angry. We are going to choose to not go on vacation in Florida,” Trudeau said. “We are going to choose to try and buy Canadian products ... and yeah we’re probably going to keep booing the American anthem.”
The premier of Ontario, Canada’s most populous province, said that he would issue a 25% export tax on electricity sold to the U.S. and may later cut it off completely if the American tariffs persist. Ontario powered 1.5 million homes in the U.S. in 2023 in Michigan, New York and Minnesota.
Ontario Premier Doug Ford also told The Associated Press that he would stop the sale of nickel and rare minerals to the U.S.
Ontario and other provinces already began removing American liquor brands from government store shelves. The Liquor Control Board of Ontario sells nearly $1 billion Canadian dollars ($687 million) worth of American wine, beer, spirits and seltzers every year.
A government official said Lutnick called Ford after Ford’s press conference and asked him to stand down. The official, who spoke on condition of anonymity because they were not authorized to speak publicly about the call, said Ford told the U.S. commerce secretary he’ll go harder.
The official said Lutnick told Ford that Trudeau’s “very dumb” comment and comments by other Canadian officials were not helpful, but said Lutnick seemed to acknowledge the tariffs are a part of negotiation toward a trade deal.
U.S. President Donald Trump’s long-threatened tariffs are here, plunging the country into an escalating trade war with China, Canada and Mexico.
Trump’s 25% tariffs on imports from Canada and Mexico went into effect Tuesday, along with a heightened 20% levy on Chinese goods. In response, all three countries announced retaliatory measures.
Experts say consumers and businesses will be the hardest hit. Companies big and small will face higher costs on the goods they buy from other countries — and could have little recourse but to hike prices themselves. For consumers, that will likely mean more expensive price tags on everything from cars, appliances and other big-ticket items to smaller, everyday purchases including electronics, gasoline and groceries.
How are Canada, Mexico and China responding?
Canada, Mexico and China all declared on Tuesday that they would impose retaliatory taxes on many U.S. products.
China is imposing tariffs of up to 15% on a wide array of key U.S. farm exports, including American-grown chicken, pork, soy and beef. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.
Meanwhile, Canadian Prime Minister Justin Trudeau announced that his country would slap tariffs on more than $100 billion of American goods over the course of 21 days. And Mexican President Claudia Sheinbaum said her country will respond with its own retaliatory tariffs on U.S. goods. Unlike Canada or China, however, she said she would not announce specific tariffs until Sunday — possibly indicating that Mexico still hopes to de-escalate the trade war.
“All of the economies involved in the tariffs will see a loss in their real GDP (gross domestic product) and increasing consumer prices in general,” said Wendong Zhang, an assistant professor of applied economics and policy at Cornell University.
Canada and Mexico will suffer considerably more than the U.S. because of the U.S. economy’s size and strengthening dollar, Zhang added. For the U.S., the combined tariffs on China, Canada and Mexico could result in about a 0.4% GDP loss, amounting to over $100 billion, he said.
The tariffs may be short-lived if the U.S. economy suffers. But Trump could also impose more tariffs on additional countries such as India or EU nations, and more products such as computer chips and pharmaceutical drugs. The president has injected a disorienting and unpredictable volatility into the world economy, leaving it off-balance as people wonder what he will do next.
What is the impact on US businesses?
Manufacturing companies and retailers for a wide array of goods will feel the impact.
“International trade is critically important to our business and industry,” Best Buy CEO Corie Barry said on an earnings call Tuesday. “The consumer electronics supply chain is highly global, technical and complex. China and Mexico remain the No. 1 and No. 2 sources for products we sell, respectively.”
At Target, sales and profits slipped during the crucial holiday quarter as customers held back on spending, and there will be “meaningful pressure” on the company’s profits in early 2025 because of the tariffs and other costs, CEO Brian Cornell said at the company’s annual investor meeting Tuesday.
Car companies’ supply chains that cross the borders of the U.S., Canada and Mexico could be disrupted — in addition to auto parts that come from China.
What impact will the tariffs have
on consumers?
Tariffs on China could impact a variety of consumer products, including cellphones, children’s toys and clothing that Americans buy every day.
Some companies have been working to delay or lessen the blow on consumers by stockpiling what they can or shifting manufacturing and suppliers back to the U.S. or other countries not impacted by the new levies.
Still, it’s easier to stock up on some goods than others. And even some “made-in-USA” products may contain plastics or packaging from China, for example. Wider supply chain shifts are also complicated and far from easy to carry out.
When it comes to consumer electronics, “We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely,” Best Buy’s Barry said.
And with the U.S. spending billions on fruits and vegetables imported from Mexico and Canada each year, shoppers could face additional sticker shock in the grocery aisle. The new tariffs could also hike prices of tequila, mezcal, whiskey and other spirits made in those countries.
Tariffs add another “mental calculus” for consumers on top of other price pressures today — such as soaring egg prices due to avian flu, Zhang says. He adds that shoppers will need to watch prices for everyday items more closely.
When will customers see prices go up?
Exactly when consumers will see prices rise isn’t clear, but perishables will likely get hit first.
Especially during colder months, retailers rely on foreign imports for fresh fruit and vegetables, and long-term storage isn’t an option. Shoppers could start seeing the prices of produce such as avocados, which come from Mexico, go up industrywide as early as in a few days, Target’s Cornell told reporters on Tuesday.
But he added that the extent to which prices will increase depends on how things play out over the next few weeks.
“I think things are unfolding so quickly,” Cornell said. “We will watch this carefully and understand, are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think all of us are speculating, and I think we’re going to listen and learn and make sure that we can control the things we can control. But we don’t want to overreact right now to one day and one headline.”