President Donald Trump has said he is moving forward with 25% tariffs on goods imported from Canada and Mexico into the US, adding that time had run out to reach a deal.

US stock markets sank in response to the measures, which he has threatened since earlier this year and said would now go into effect on Tuesday.

An additional 10% tariff on Chinese imports is also expected to come into force, leaving all three of America’s top three trade partners facing significantly higher trade barriers than just a few weeks ago.

“No room left for Mexico or for Canada,” Trump said at the White House on Monday. “The tariffs, you know, they’re all set. They go into effect tomorrow.”

Canadian Foreign Minister Melanie Joly told reporters later on Monday: “Let’s be clear, if Trump is imposing tariffs, we’re ready.”

She said Ottawa planned to impose retaliatory tariffs against US imports of $155bn (£122bn), with the first tranche of $30bn ready immediately to be levied on everyday goods like pasta, clothing and perfume.

Joly noted that Canada did not want a trade war, but would hit back if the US started one.

The foreign minister added that the tariffs were “an existential threat to us”, with “thousands of jobs in Canada at stake”.

Mexico and China have also said they will retaliate against the US tariffs, raising the prospect of a widening trade war.

Trump threatened to impose the tariffs, which are a tax added to a product when it enters a country – on Canada, Mexico and China in response to what he said was the unacceptable flow of illegal drugs and illegal immigrants into the US.

All the tariffs were supposed to take effect last month, until the US agreed to a one-month delay for Canada and Mexico, pulling its North American neighbours back from the brink of a potentially damaging trade war.

But Trump went ahead with imposing a 10% tariff on Chinese exports to the US in February, meaning goods from the country now face a levy of at least 20%.

Trump has long maintained that tariffs are a useful tool to correct trade imbalances and protect US manufacturing.

He has largely dismissed concerns that the measures risk economic damage in the US, despite the close ties, especially in North America, where businesses have enjoyed decades of free trade.

“What they’ll have to do is build their car plants, frankly, and other things, in the United States, in which case they have no tariffs,” he added.

The three major indexes in the US sank after Trump’s comments. The Dow Jones Industrial Average ended the day down 1.4%, the S&P 500 sank 1.75% and the Nasdaq fell 2.6%.

Officials from Canada and Mexico had been in Washington in recent days, trying to stave off the tariffs.

Mexican President Claudia Sheinbaum appeared to send a message to Trump earlier on Monday when she said at a public event in the city of Colima that “Mexico has to be respected”.

“Co-operation [and] co-ordination, yes, subordination, never.”

Canadian Prime Minister Justin Trudeau said on Sunday, from a summit on Ukraine in London, that Canada was “not an issue” as a source of illegal fentanyl in the US.

Only 1% of fentanyl seized in the US is thought to come from Canada, according to US data.

The Canada Border Services Agency (CBSA) says it has been “surging” its efforts to tackle fentanyl crossing into the US.

Canadian Internal Trade Minister Anita Anand met officials in Washington in recent days and said over the weekend there will be a response.

“We are steady at the wheel. We are prepared for any eventuality, but we will at every turn defend our country’s economy,” she told CBC News.

China’s state-run Global Times newspaper said that Beijing had prepared countermeasures, which would probably target US agricultural and food products.

President Trump has also announced a 25% charge on all steel and aluminium imports, which is meant to come into effect on 12 March.

In addition, he has threatened to impose custom “reciprocal” tariffs on individual countries, as well as 25% tariffs on the European Union.