White House says Canada has ‘misunderstood’ tariff order as a trade war, Mexico is ‘serious’

The White House said on Monday it has noticed that Mexico is "serious" about President Donald Trump's executive order on tariffs, but Canada has "misunderstood" it to be a trade war between the neighboring countries.

Trump on Saturday ordered sweeping tariffs on goods from Mexico, Canada and China, demanding they stanch the flow of fentanyl and illegal immigrants into the U.S., kicking off a trade war that could dent global growth and stoke inflation.

"The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," Kevin Hassett, the director of the White House's National Economic Council, said on CNBC.

"Canadians appear to have misunderstood the plain language of the executive order and they're interpreting it as a trade war," Hassett added.

When asked what Canada and Mexico must do to lift the 25% tariffs that Trump announced on Saturday, the president told reporters on Sunday they "have to balance out their trade, number one."

"They've got to stop people from pouring into our country ... they have to stop people pouring in, and we have to stop fentanyl. And that includes China," said Trump, who announced an additional 10% tariff on Chinese goods.

The president also said the tariffs against the three largest U.S. trading partners, which take effect on Tuesday, might cause Americans some short-term pain, but "long term, the United States has been ripped off by virtually every country in the world."

Trump also indicated on Sunday that the 27-nation European Union would be next in the firing line, but he did not say when.

Hassett, when asked if Trump's policies will create more inflation, said one needs to look at all of the president's policies together. "I think this is going to be one of the biggest supply-side positive shocks that we've ever seen," he said.

The NEC director also said Trump will ultimately decide "what he's going to call off and what he's not" in terms of tariffs.