President Donald Trump has said that 25 percent tariffs on imports from Mexico and Canada will start on Tuesday, sparking a trade war, with both American neighbours and Beijing who have warned they will respond in kind.

"They're going to have to have a tariff. So what they have to do is build their car plants, frankly, and other things in the United States, in which case they no tariffs," Trump said at the White House on Monday.

He said there was "no room left" for a deal that would avert the tariffs by curbing fentanyl flows into the United States.

Trump has said the tariffs are to force the two US neighbours to step up their fight against fentanyl trafficking into the US.

Trump provided a one-month delay in February as both countries promised concessions. But Trump said on Monday that there was "no room left for Mexico or for Canada" to avoid the steep new tariffs.

Trump said he would also add on another 10 percent tariff on goods from China, on top of the initial 10 percent he put in place last month.

US stock markets moved sharply lower after Trump’s comments.

Americans brace for price rises

Sweeping levies of up to 25 percent will likely snarl supply chains for key sectors like automobiles and construction materials, risking a hike in consumer prices.

This could complicate Trump's efforts to fulfill his campaign promises of lowering the cost of living for households.

CEOs and economists say the action, covering more than $900 billion worth of annual US imports from its southern and northern neighbours would deal a serious setback to the highly integrated North American economy.

Trump's tariffs on Canada are expected to pile on to other potential levies on lumber. Anecdotally, some builders expect they could face higher costs of $7,500 to $10,000 per newly-built single family home, he said.

JPMorgan analysts warned Friday that Tuesday's tariffs would "create a significant new headwind to economic activity" and boost consumer costs. They added that the planned levies on all three countries would lift the US effective tariff rate to nine percent — from 1.4 percent in 2017.

Canada and Mexico say response ready

Mexico's President Claudia Sheinbaum said on Monday that her country has contingency plans ready, whatever the decision Trump takes.

"There is constant communication in different areas, both security and trade, and we will wait to see what happens," Sheinbaum added.

Mexico last week extradited some of its most notorious imprisoned drug lords to the United States in a bid to avert the sweeping duties. They included a cartel kingpin wanted for decades over the murder of a US undercover agent.

While Washington has targeted China over chemicals for the drug, many of these components have legitimate medical uses, too — making prosecution tricky.

Canadian Prime Minister Justin Trudeau has said that less than one percent of the fentanyl and undocumented migrants that enter the United States come through the Canadian border.

But he added that Canada would "have a strong, unequivocal and proportional response" if levies took effect.

Canada will be ready to respond if Trump goes ahead with a threat to impose tariffs on all Canadian imports, Foreign Minister Melanie Joly told reporters on Monday.

Joly reiterated Ottawa's position that Canadian countermeasures against US imports could total C$155 billion.