The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed around 0.66 percent.
Trump's latest move amounts to "blackmail" in the NAFTA renegotiation, but it doesn't kill chances of carving out a deal, says a veteran of Canada's free trade battles.
Beyond steel, the bigger question is what the metal tariffs mean for the North American Free-Trade Agreement (NAFTA), which links America, Canada and Mexico together for production of many goods, and which Mr Trump is seeking to renegotiate.
Canada's minister of foreign affairs, Chrystia Freeland, said her country would place tariffs on up to 16 billion Canadian dollars ($12.4 billion) worth of American goods, including steel and aluminum.
Mr. Trump says - as he has many times before - that NAFTA has been a bad deal for the United States, while its North American trading partners make "many billions of dollars" at the expense of Americans. It's been a lousy deal for the United States from Day One, ' Trump said.
Mexico announced it will retaliate with duties on U.S. products including fruit, pork bellies, cheese and flat steel.
U.S. Senator Orrin Hatch said, "Tariffs on steel and aluminum imports are a tax hike on Americans".
The S&P 500's packaged foods and meats industry sub-index fell 2 per cent, with shares of meat producer Tyson Foods Inc falling 4 per cent, Campbell Soup Co 2.5 per cent and spice maker McCormick & Co Inc 3 per cent.
The peso was down 1.18% to 19.9741 versus the dollar at 11:00 a.m. ET.
The EU has threatened tariffs on Harley-Davidson motorcycles and bourbon, measures aimed at the political bases of US Republican legislators.
Canada, Mexico and the European Union had been granted temporary exemptions from those tariffs while the United States pursued negotiations to address the administration's concerns about the state of domestic steel and aluminum production.
Macroeconomic Advisers, a research firm focused on the United States economy, reported Wednesday that the USA trade deficit in goods was "much narrower than expected", implying "substantially more" U.S. exports in the second quarter.
"This is not the way we do business, and certainly not between long-standing partners, friends and allies".
The tariffs are part of Trump's effort to protect US industry and workers from what he described as unfair global competition.
"Other countries", according to the announcement, is in reference to those nations that were granted temporary exemption but did not negotiate settlements under threat of the tariffs. It has demanded permanent exemption from any new tariffs.
The Mexican economy ministry also related the country's displeasure with the new crackdown: "Mexico profoundly regrets and condemns the decision by the United States to impose these tariffs on imports of steel and aluminium from Mexico".
Speaking to BBC Radio 4's Today programme, Mr Lange said he would like to see tariffs imposed on "symbolic" United States products such as Harley-Davidson motorcycles.
"It just doesn't make any sense and we're going to continue to explain that to the president and the American administration", he said on CBC, adding that the relationship had always been "positive and mutually beneficial". European exports and Asian exports are now going to have a competitive advantage over the US.
Former British trade minister Francis Maude called Trump's decision "stupid", "counterproductive" and that "any government that embarks on a protectionist path inflicts the most damage on itself".