One of the biggest bilateral trading partnerships in the world, involving over $900 billion in products and services annually, will be upended by this trade war.
Following Trump’s earlier statement that Canada and Mexico could not escape the massive tariffs he has been threatening since his election in November, the retaliatory actions were anticipated.
President Donald Trump indicated on Tuesday that his administration will proceed with levies against Canada and Mexico, prompting the Canadian government to unveil a comprehensive package of counter-tariffs against US-made goods.
In a statement late Monday, Prime Minister Justin Trudeau declared, “Canada will not allow this unwarranted decision to remain unanswered.” He unveiled the identical retaliatory strategy in February following Trump’s signing of his executive order imposing wide tariffs.
According to Trudeau, unless the US lowers its tariffs, the first phase, which consists of 25% tariffs on goods valued at roughly C$30 billion ($20.6 billion) from US exporters, will take effect at 12:01 a.m. New York time. In three weeks, C$125 billion worth of goods, including expensive ones like vehicles, trucks, steel, and aluminum, will be subject to a second round of duties at the same rate.
“We are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures, and our tariffs will remain in place until the US trade action is withdrawn,” Trudeau stated.
Following Trump’s earlier statement that Canada and Mexico could not escape the massive tariffs he has been threatening since his election in November, the retaliatory actions were anticipated. One of the biggest bilateral trading partnerships in the world, involving over $900 billion in products and services annually, will be upended by this trade war. The biggest single purchaser of US goods is Canada, and vice versa.
Both stocks and the Canadian dollar plummeted; the benchmark S&P/TSX Composite Index fell 1.5%, the biggest since December 18. Overnight swap traders’ wagers that the Bank of Canada will lower interest rates by 25 basis points at its meeting on March 12 increased from about a coin flip to nearly 80%.
Trump’s executive order, which was signed on February 1st, calls for 10% tariffs on Canadian energy items like uranium, natural gas, and crude oil, as well as 25% tariffs on the majority of US imports from Canada and Mexico.
A protracted tariff battle may reduce Canadian GDP by over 3% over the course of two years and “wipe out growth,” the Bank of Canada has warned. Prices for US-imported goods would increase, exporters would reduce output and jobs, consumers and businesses would spend less, and the demand for Canadian goods in the US would decline.
Trudeau, who will be leaving office in a few days, returned on Monday from a trip to London, where he met with other leaders, including UK Prime Minister Keir Starmer.
Trudeau, who’s set to leave office in a matter of days, returned Monday from a trip to London, where he met with UK Prime Minister Keir Starmer and other leaders.
The uncertainty brought on by President Trump’s drip-drip-drip tariff threats has already hurt businesses on both sides of the border, according to a statement from Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce.
“Restoring Canada and the US as reliable economic allies will take time. Depending on what politicians decide on any given day, businesses cannot just change their entire business model to avoid tariffs and then return to it, Holmes said.
According to Trump’s executive action, Canada permits an excessive amount of fentanyl to cross its border. According to Canadian officials, that is simply untrue, citing data from the US government that indicates that less than 1% of the illegal opioids collected by US border agents are discovered at or close to the northern crossing.
Nevertheless, Trudeau’s administration unveiled a C$1.3 billion plan to increase aerial monitoring using drones and helicopters in order to strengthen border security. A proposal for a new North American collaborative “strike force” to combat the fentanyl trade was part of it. Along with increasing the number of people available to monitor the border and appointing a so-called fentanyl czar, the prime minister also pledged additional steps to combat organized crime.
The provinces of Canada are likewise ready to strike back at the United States.
At a mining convention in Toronto on Monday, Ontario Premier Doug Ford declared, “A tariff on Canada is a tax on Americans.” “With a smile on my face, I will stop at nothing to stop them from destroying Ontario, including cutting off their energy.” I’m urging all other provinces to follow suit.
Ford said that he would terminate his province’s relationship with Starlink, the satellite network operated by Elon Musk. Ontario and other provinces have pledged to restrict or exclude US corporations from government contracts. The premier of Ontario also threatened to stop nickel exports to the United States. In an interview with NBC News, the provincial leader stated, “It will shut down manufacturing because 50% of the nickel you use is coming out of Ontario.”
In recent weeks, Canadian cabinet ministers, province premiers, and other decision-makers have visited Washington on several occasions to discuss the border and to implore US lawmakers and Trump team members to refrain from enacting the tariffs.
According to Joly, government representatives have had positive discussions with Trump administration officials. However, she acknowledged that “we will be dealing with a level of unpredictability and chaos that comes out of the Oval Office.”
There is “no question” that tariffs will hurt the Canadian economy, according to remarks made earlier Monday by Immigration Minister Marc Miller.
It will harm Americans as well, and we will have to bring the fight. It’s crucial to stress that it will harm 35 of those states because Canada is their main trading partner. And we’re hoping that reason will win out.
