US President Donald Trump confirmed on Tuesday that his administration will continue to impose tariffs on Canada and Mexico. Subsequently, the Canadian government announced plans to impose comprehensive counter-tariffs on US products.
Canadian Prime Minister Justin Trudeau said in a statement later on Monday: “Canada will not stand idly by in the face of this unreasonable decision.” The retaliatory plan is the same as the one he announced after Trump signed an executive order in February to impose comprehensive tariffs.
Trudeau said that in the first stage, a 25% tariff would be imposed on about 30 billion Canadian dollars (20.6 billion US dollars) worth of goods exported from the United States, and the measure would take effect at 12:01 a.m. New York time unless the United States lifted the tariffs. The second round of tariffs would be imposed on 125 billion Canadian dollars worth of products at the same rate within three weeks, and the list would include large items such as automobiles, trucks, steel and aluminum.
Trudeau said, “Our tariffs will remain in place until the United States withdraws its trade actions. If the U.S. tariffs do not cease, we will engage in active and ongoing discussions with the provinces and territories to implement a number of non-tariff measures.”
Trump previously stated that Canada and Mexico could not avoid the comprehensive tariffs he has been threatening to impose since his election last November, and thus he took these retaliatory measures. This trade war will undermine one of the world’s largest bilateral trade relationships, with an annual trade volume of goods and services exceeding 900 billion US dollars. Canada is the largest buyer of US goods, and vice versa.
The Canadian dollar and the stock market plunged, with the benchmark S&P/TSX Composite Index falling 1.5%, marking the biggest drop since December 18. Overnight swap traders increased their bets that the Bank of Canada will cut interest rates by 25 basis points at its March 12 meeting, raising the probability from about a coin toss to nearly 80%.
The Bank of Canada has warned that a prolonged tariff war could reduce Canada’s output by nearly 3% within two years and “wipe out economic growth” during that period. The demand for Canadian goods from the United States will be affected, exporters will cut production and jobs, the prices of products imported from the United States will rise, and consumers and businesses will reduce spending.
Trudeau will step down in a few days. He returned from London on Monday and met with British Prime Minister Keir Starmer and other leaders in London.
Matthew Holmes, director of public policy at the Canadian Chamber of Commerce, said in a statement: “The uncertainty brought about by President Trump’s repeated tariff threats has already caused damage to businesses on both sides of the border.”
“We still have a long way to go to make Canada and the United States reliable economic partners again. Businesses can’t change their entire model to avoid tariffs and then go back to the original model depending on the politicians’ decisions of the day,” Holmes said.
The provinces of Canada are also preparing to take retaliatory actions against the United States.
Ontario Premier Doug Ford said at a mining conference in Toronto on Monday: “Imposing tariffs on Canada is imposing taxes on Americans. If they try to destroy Ontario, I will take every measure with a smile on my face – including cutting off their energy. I encourage other provinces to do the same.”
Ontario and other provinces have committed to restricting or banning U.S. companies from participating in government contracts. Ford has reiterated that he will terminate the province’s contract with Elon Musk’s satellite network Starlink. The Ontario premier has issued a new threat, saying he is prepared to cut off nickel exports to the United States. The provincial leader told NBC News in an interview, “This will cause manufacturing to come to a standstill because 50% of the nickel you use comes from Ontario.”
In recent weeks, Canadian cabinet ministers, provincial premiers and other policymakers have made multiple trips to Washington to discuss border issues and urge US lawmakers and members of the Trump team not to impose tariffs.
Joly said that government officials had good conversations with members of the Trump administration. But “there is a certain degree of unpredictability and chaos within the White House, and we will deal with it,” she said.
Immigration Minister Marc Miller said earlier on Monday that there is no doubt that tariffs will deal a heavy blow to the Canadian economy.
We must launch a struggle, and this will also hurt Americans. It must be restated that the main trading partner of these 35 states is Canada, so this will hurt them. We hope that this logic will prevail.
