AMNA NAWAZ: Welcome to the "News Hour."

Ahead of the president's address to Congress tonight, the White House is implementing two new policies with global consequences.

GEOFF BENNETT: The Trump administration is halting military aid to Ukraine and it's imposing new tariffs on Mexico, Canada and China.

That sparked a wider trade war and sent markets plummeting for a second day in a row.

We start tonight with the economic fallout.

Hours after the new tariffs took effect, a blunt rebuke from America's second largest trading partner.

JUSTIN TRUDEAU, Canadian Prime Minister: Even though you're a very smart guy, this is a very dumb thing to do.

GEOFF BENNETT: Speaking directly to President Trump, Canadian Prime Minister Justin Trudeau announced tariffs on more than $100 billion of U.S. exports in the coming weeks, a quarter of which take effect immediately.

JUSTIN TRUDEAU: Canadians are reasonable and we are polite.

But we will not back down from a fight.

Our tariffs will remain in place until the U.S. tariffs are withdrawn.

GEOFF BENNETT: The new U.S. tariffs in effect today impose a 25 percent tax on imports from Canada and Mexico and raise duties on Chinese goods to 20 percent.

HOWARD LUTNICK, U.S. Commerce Secretary: There may well be short-term price movements.

But in the long term, it's going to be completely different.

GEOFF BENNETT: Commerce Secretary Howard Lutnick defended the tariffs on CNBC and said they could be lifted later on.

He argued today's policy is tied to the flow of fentanyl into the U.S. from China and across the borders with Canada and Mexico.

HOWARD LUTNICK: We need to see material reduction in autopsied deaths from opioid.

And that's what the president is talking about.

This is not a trade war.

GEOFF BENNETT: Trudeau said Canada has stepped up its efforts to control fentanyl and that only a tiny fraction of the drug seized at U.S. borders comes from Canada.

Meantime, Mexican President Claudia Sheinbaum pledged retaliatory steps to be announced Sunday.

CLAUDIA SHEINBAUM, Mexican President (through translator): It is by no means our purpose to start an economic or trade confrontation, which unfortunately and regrettably is the opposite of what we should be doing, that is, integrating our economies more to strengthen our region.

GEOFF BENNETT: In Beijing, China retaliated with tariffs up to 15 percent on U.S. farm exports.

LIN JIAN, Chinese Foreign Ministry Spokesperson (through translator): The countermeasures China has taken are entirely justified and necessary to safeguard its own rights and interests.

GEOFF BENNETT: Trade among the U.S., China, Mexico and Canada totals more than $2.2 trillion across a wide swathe of goods.

For example, the U.S. imports cell phones, computers and other electronics from China, lumber from Canada and much of its produce from Mexico.

More than 20 percent of the cars, SUVs and pickup trucks Americans buy come from Canada and Mexico.

Markets tanked again today as a number of business groups and retailers warn the pain of a trade war is about to hit.

BRIAN CORNELL, CEO, Target: If there's a 25 percent tariff, those prices will go up.

GEOFF BENNETT: Target CEO Brian Cornell told CNBC that his company imports much of its winter produce from Mexico.

BRIAN CORNELL: Those are categories where we will try to protect pricing, but the consumer will likely see price increases over the next couple of days.

GEOFF BENNETT: And the impact isn't limited to consumers.

President Trump's tariffs had Wall Street spooked for a second straight day.

The Dow Jones industrial average dropped 670 points on the day.

The Nasdaq ended 65 points lower after flirting with correction territory earlier in the day.

The S&P 500 also ended lower and has now erased all its gains after Mr. Trump's election.

Soon after the markets closed, Commerce Secretary Howard Lutnick told FOX business that President Trump may offer some kind of relief to Canada and Mexico from part of the tariffs tomorrow.

But he offered no details.

For the moment, those tariffs are in full effect, and we spoke earlier about the consequences with Roben Farzad, economic analyst and host of public radio's "Full Disclosure".

Roben, thanks for being with us.

ROBEN FARZAD, Host, "Full Disclosure": Thank you, Geoff.

GEOFF BENNETT: So we have got the makings of a potentially devastating trade war.

China and Canada will impose their own tariffs on billions of dollars worth of U.S. goods.

In response to President Trump's tariffs, Mexico plans to announce new levies soon.

Lots of uncertainty being wrought by all of this.

What stands out to you?

ROBEN FARZAD: We're living in the essay section of an AP history exam in, what, year 2050.

I mean, that's the thing.

It's like you can learn from history and we are only so analogous to the last time the United States slapped the world with so many tariffs kind of and caused a full-throated trade war the way we're seeing right now.

But I'm still saying that there's a wait-and-see approach.

Certainly, the first thing to react, markets.

We saw the bond market price in more likelihood of recession.

We saw the stock market tumble the last few days.

We see retailers, producers, farmers and the like come out and anecdotally suggest that they're stressed, but it really hasn't had time to hit yet the true economy and for consumers to feel it.

GEOFF BENNETT: Yes, that's the big question right now.

What's going to be the impact?

Our team spoke with Steve Lamar.

He's president and CEO of the American Apparel and Footwear Association.

Here's what he had to say.

STEVE LAMAR, President and CEO, American Apparel and Footwear Association: Mexico specifically, you have got this very strong partnership between the U.S. and the Mexican textile and apparel industry.

We ship a lot of yarns and fabrics down to Mexico.

They're converted into garments and they're brought back up to the United States.

Of course, our textile industry, they need all the export markets they can get.

And when we turn around and create this huge obstacle to that market, we're undermining not only the ability of our industry to create good jobs on both sides of the border, but also to -- for the textile industry, a partner of ours, to create good jobs as well.

GEOFF BENNETT: So he's making the point that the North American economies are so interconnected.

I mean, what might be the impact on the average U.S. consumer?

ROBEN FARZAD: Well, there's a false nostalgia.

I think Donald Trump, you saw in his press conference, he says there's an easy answer to this.

Build it kind of soup-to-nuts here.

Integrate across the board.

Don't just be sending it back and forth the border, Mexico, Canada, whether it's textiles or autos.

I will say there's tremendous slack in the system.

You could always turn to a Bangladesh, a Cambodia, El Salvador.

There are other markets that are very willing to take the raw materials and turn them around back to us.

But if you look at the likes of Walmart and Target and Gap and the various apparel manufacturers, towel makers, they have longstanding relationships that took 20-plus years to source after NAFTA, that they're suddenly going to have to scramble and say, wow, I can't get this done.

And it's brutal.

I mean, Walmart is going to say, well, if you can't get it done, who can?

And this is where it becomes self-defeating for us.

It ends up hurting our farmers, hurting the ones that churn out the cotton, the hemp, the various other raw materials that go into these textile products, for example.

GEOFF BENNETT: Well, the conservative-leaning Wall Street Journal editorial board has weighed in, and they published an op-ed with the headline, "Trump Takes the Dumbest Tariff Plunge."

And there's a line in here that stood out to me.

It says: "Mr. Trump is volatile.

And who knows how long he will keep the tariffs in place?"

Wars are easy to start, not so easy to end.

How might this end, Roben?

ROBEN FARZAD: It's interesting.

It speaks to an old kind of Chamber of Commerce wing of the GOP.

You and I have talked about it before, where, at least very quietly, you were grateful for immigrant labor.

You were grateful for the gains from trade that you would see, the fact that you could go to a Walmart and buy a $20 DVD player because so much was manufactured in China and abroad.

There was always a dividend for the American consumer, which helped the American consumer build her quality of life or the things that she could afford.

And that freed up money for other things.

But it points to a kind of a long-lost fissure in that party, because very much the business Chamber of Commerce wing has been muted.

You're seeing, even with Jamie Dimon, the king of Wall Street, the CEO of J.P. Morgan, say, you know what, they're going to be tariffs and we got to take it.

We got to take this bad medicine.

It's not going to be the end of the world.

So it'd be curious to see which kind of coalition comes out afterwards and say, well, look, see what you wrought?

There's a better way.

GEOFF BENNETT: We have also heard President Trump say that he wants the Fed to cut rates.

Do you see a scenario where the Fed would cut rates if these tariffs are -- prove to be a real drag on the economy?

ROBEN FARZAD: I mean, if we shoot ourselves in the foot and push the economy into a recession, then that would help fully snuff out inflation.

And then weakness becomes an unemployment spiking and credit quality deteriorating.

And you would see all sort of worrisome indicators and layoffs and pink slips going out.

Well, that's a Pyrrhic victory.

I don't know if that's something -- it's kind of a roundabout way, but let's not forget that Trump hasn't been in office for all that long.

And this has already kind of bent the theme of the economy away from a worry, I think, about inflation to on the margin worries about a recession.

You see where a consumer sentiment is.

You see the report from the Atlanta Fed that, if it's something that he wanted to do there, I think there are easier ways of maybe putting slack into the economy than throwing the entire global economy into disorder.

GEOFF BENNETT: Roben Farzad, host of the podcast "Full Disclosure," thanks for being with us.

ROBEN FARZAD: Thanks, Geoff.