President Donald Trump said Monday he is imposing new 25% tariffs at midnight on exports from America’s two biggest trading partners, Mexico and Canada, ignoring evidence that the neighboring countries curtailed illegal migration and the flow of illicit drugs into the U.S. as he had demanded.

“The tariffs, you know, they’re all set,” Trump said at the White House. “They go into effect tomorrow.”

All three major U.S. stock indexes fell sharply near the end of trading for the day as Trump made the announcement.

The fallout from the tariff hikes could roil the economies of all three countries, with possibly less U.S. demand for Mexican and Canadian goods that would cost more and higher prices for U.S. consumers and businesses for the products that actually are transported into the United States.

It was not immediately clear how Mexico and Canada would respond, but both Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau threatened to boost their own levies on U.S. exports if Trump went ahead with his.

The U.S. leader first announced the 25% tariff hikes a month ago, contending Mexico and Canada were not doing enough to curb illegal migration and the flow of drugs into the United States, especially the deadly opioid fentanyl.

Then he delayed the levies until midnight Monday after Sheinbaum and Trudeau promised to take steps to close the border to undocumented migrants and cut drug trafficking.

But with the imposition of the tariffs hours away, U.S. Commerce Secretary Howard Lutnick told CNN that Trump was weighing whether to implement his original decision.

“The Mexicans and the Canadians have done a nice job on the borders,” with “illegal [migrant] crossings at their lowest point ever. They haven’t done enough on fentanyl. Let’s see how the president weighs that,” Lutnick said.

The Commerce chief said fentanyl deaths are down 15% in the U.S., although he didn’t say over what timeframe.

“So, the president is saying, ‘I appreciate what you have accomplished, but you haven’t accomplished enough,’” Lutnick said.

Trump also plans to proceed Tuesday with a new 10% tariff on Chinese goods, doubling 10% duties he imposed on February 4. Trump has blamed China as the source of fentanyl trafficking into the U.S.

After Trump announced the new duties on Mexico and Canada last month, Sheinbaum sent 10,000 troops to Mexico’s northern border with the U.S. to curb the flow of narcotics, while Trudeau named Kevin Brosseau, a former senior Canadian policeman, as the country’s “fentanyl czar” to deal with the issue and on policing Canada’s southern border with the U.S.

When he first announced the tariffs on his Truth Social media platform, Trump said, “Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels. A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China.”

Sheinbaum, whose trade-dependent economy sends 80% of its exports to the U.S., said last week Mexico was "expecting to reach a deal with the United States" before the new levy took effect, but that if not, it could impose retaliatory tariffs on U.S. products exported to Mexico.

Trudeau said a new U.S. tariff was "entirely unjustified” and promised to impose a 25% tax starting March 12 on U.S. steel and aluminum products exported to Canada.

Canada is the top exporter of both metals to the U.S.

Economists say the tariffs Trump is imposing are likely to boost retail prices for consumers and the cost of materials for businesses. Mexico, Canada and China, in that order, are the three biggest national trading partners with the U.S., although collectively, the 27-nation European Union is larger than all three individually.

Trump, at the first Cabinet meeting of his new presidential term last week, said he would “very soon” announce a 25% tariff on EU exports to the U.S.

With Trump signaling the new tariff on goods sent to the U.S., the EU vowed to respond “firmly and immediately” to “unjustified” trade barriers and suggested it would impose its own tariffs on U.S. imports if Trump proceeded with his.

Trump said reciprocal tariffs on nations that levy taxes on U.S. exports are still set to take effect on April 2. He has also hinted at putting tariffs on automobile imports, lumber, pharmaceutical products and other goods.

Many economists have repeatedly warned that tariffs could lead to higher prices, boosting troublesome inflation in the U.S. Trump has acknowledged there could be short-term pain for Americans but has contended that tariffs would ultimately be beneficial to the U.S. economy, the world’s largest.

Trump says the tariffs he is imposing would be an incentive for foreign companies to do more manufacturing in the United States to avoid the tariffs on overseas shipments of their products to the U.S.