Canada and Mexico gambled on a free trade future. The bet is turning sour.

Subscribe to enjoy similar stories. Few countries have bet as heavily on free trade as Mexico and Canada. Now that President Trump says 25% tariffs will hit both countries Tuesday, their economies are facing a stress test that rivals the global financial crisis and the pandemic.

Canada and Mexico have separately signed more than a dozen treaties each—among the most in the world—that give them open access to the markets of more than 50 countries. The most important remains the U.S., Mexico, Canada Agreement, an updated version of the 1994 North American Free Trade Agreement that eliminated most barriers to trade between the three countries. More than 80% of both countries’ exports go to the U.S.

The deal turned Mexico into an export powerhouse, becoming one of the world’s top exporters of vehicles, beer and flat-screen TVs. Canada, for its part, used free trade deals with the U.S., which date to the 1960s, to help vault its now $2 trillion economy into the elite Group of Seven, or G-7. Their calculus was honed over several decades and became conventional wisdom: a belief that a world led by their neighbor, the U.S., would only become more interconnected and market-oriented.

Now, the tariffs could cause big contractions in both countries’ economies, with Canada facing a loss of up to 5% of GDP and Mexico 3%, analysts estimate. They will need to find a new way forward, focusing more on domestic markets, or trading with fewer countries, trade analysts said. Neither country has an easy short-term fix.

“The U.S. turning its back on this model is a big blow for us," said Juan Carlos Baker, who served as Mexico’s deputy trade minister during negotiations that led to the USMCA’s signing in 2018. “It will mark the end of an era."