Trade Battle Heats Up: Canada Imposes Tariffs On $107 Billion Of US Goods!

The Canadian government announced a comprehensive package of counter-tariffs against US-made products after President Donald Trump confirmed his administration’s plan to impose broad tariffs on Canada and Mexico. In a strong statement, Prime Minister Justin Trudeau declared, “Canada will not let this unjustified decision go unanswered,” signaling a robust retaliatory strategy.

A Two-Stage Retaliation Plan

Under the new measures, Canada will initially impose a 25% tariff on approximately C$30 billion ($20.6 billion) worth of goods from US exporters. These tariffs are scheduled to take effect at 12:01 a.m. New York time unless the US drops its tariffs. In three weeks, a second round of 25% tariffs will target roughly C$125 billion of products, including high-value items such as cars, trucks, steel, and aluminum. Trudeau emphasised that these tariffs would remain in place until US actions cease, and additional non-tariff measures are also under consideration in discussions with provinces and territories.

Economic Impact and Market Reactions

The retaliatory measures are expected to disrupt one of the world’s largest bilateral trade relationships, valued at over $900 billion annually. Following the announcement, the Canadian dollar and stocks plummeted; the S&P/TSX Composite Index fell 1.5%, marking the steepest decline since December 18. Overnight trading in swaps has increased expectations that the Bank of Canada might cut interest rates by 25 basis points at its March 12 meeting.

Trump’s Tariff Threat and Border Security Concerns

President Trump’s executive order, signed on February 1, calls for 25% tariffs on most US imports from Canada and Mexico, along with a 10% tariff on Canadian energy products such as crude oil, natural gas, and uranium. The Canadian government refutes claims that Canada permits excessive fentanyl flow across the border, pointing to US data showing less than 1% of the illicit opioid near the crossing. In response, Canada announced a C$1.3 billion initiative to bolster border security through enhanced aerial surveillance with helicopters and drones, a new joint North American “strike force” to combat fentanyl, and increased personnel at the border.

Provincial Reactions and Political Tensions

Ontario Premier Doug Ford warned that a tariff on Canada is effectively a tax on Americans. Speaking at a mining convention, Ford declared, “If they’re going to try to annihilate Ontario, I will do everything — including cutting off their energy — with a smile on my face.” Ford also pledged that Ontario and other provinces would take steps such as limiting US companies from government contracts, ending Ontario’s contract with Starlink, and even threatening to cut off nickel exports to the US, potentially crippling US manufacturing reliant on Ontario nickel.

Diplomatic Efforts and Uncertainty

Canadian cabinet ministers and provincial premiers have been actively engaging with US lawmakers in Washington to address border concerns and urge an end to the tariff threats. Despite some promising discussions with members of the Trump administration, Canadian officials remain wary of the unpredictability emanating from the Oval Office. Immigration Minister Marc Miller stressed that the tariffs will undoubtedly harm the Canadian economy, noting that 35 US states have Canada as their primary trading partner.