Despite no signs of a policy reversal, U.S. President Donald Trump has officially imposed blanket tariffs on Canadian goods. In response, Canada has enacted its first wave of retaliatory tariffs on select U.S. imports.
Trump confirmed on Monday that his administration would proceed with 25% tariffs on most Canadian goods, effective midnight Tuesday. This move marks the start of a full-fledged trade war between the two historically close allies.
Canada Retaliates with Counter-Tariffs
Canadian Prime Minister Justin Trudeau responded swiftly, announcing that a first tranche of countermeasures targeting $30 billion worth of U.S. goods would also take effect at midnight. An additional $125 billion in tariffs will follow within 21 days if the U.S. trade action is not withdrawn.
"Our tariffs will remain in place until the U.S. lifts its trade restrictions," Trudeau stated Monday evening. "Should these tariffs persist, we are in active discussions with provinces and territories to explore further non-tariff measures."
While urging the U.S. administration to reconsider, Trudeau emphasized that Canada is committed to protecting its economy, jobs, and workers while advocating for fair trade.
Trump: ‘No Room Left’ for Negotiations
Speaking to reporters at the White House, Trump dismissed the possibility of Canada preventing the tariffs.
"Very importantly, tomorrow, tariffs—25% on Canada, 25% on Mexico—will go into effect," Trump declared. "There’s nothing they can do to stop it. No room left."
The president justified the trade action by accusing Canada of allowing fentanyl and illegal migrants into the U.S., despite data showing that border enforcement has already increased. U.S. government figures indicate that only 19.5 kilograms of fentanyl were seized at the northern border last year, compared to 9,570 kilograms at the southwestern border.
Economic Fallout and Market Reactions
The tariffs pose significant risks to both economies, potentially leading to:
- Job losses in key industries
- Economic slowdowns due to rising costs
- Higher inflation as import prices rise
- Strained diplomatic relations between Canada and the U.S.
Following Trump’s announcement, stock markets in both countries tumbled, reflecting investor concerns over the economic damage these tariffs could cause.
Ontario Premier Doug Ford: ‘They Need to Feel the Pain’
Newly elected Ontario Premier Doug Ford vowed to fight back, even suggesting cutting off energy supplies to the U.S. if necessary.
"If they want to try to annihilate Ontario, I will do anything—including cutting off their energy—with a smile on my face," Ford declared.
"They need to feel the pain. If they come at us, we have to hit back twice as hard," he added.
CUSMA in Jeopardy as Trade Relations Crumble
Trump’s tariffs undermine the Canada-U.S.-Mexico Agreement (CUSMA), effectively dismantling decades of free trade in North America.
Economists warn that a prolonged trade conflict could plunge the Canadian economy into a severe recession.
Bank of Canada Governor Tiff Macklem highlighted the risks last month, stating:
"In the pandemic, we had a steep recession followed by a rapid recovery. This time, if tariffs are long-lasting and broad-based, there won’t be a bounce-back. It’s not just a shock—it’s a structural change."
The tariffs will make Canadian goods less competitive, forcing American importers to pay an additional 25% levy, raising costs for consumers and reducing demand for Canadian exports. Some U.S. businesses may even stop importing Canadian products altogether, impacting Canadian jobs and businesses.
Chamber of Commerce: ‘Long Road to Recovery’
Matthew Holmes, Executive Vice-President and Chief of Policy at the Canadian Chamber of Commerce, warned that Trump’s repeated tariff threats have already caused immeasurable damage to the U.S.-Canada economic partnership.
"We have a long road ahead before Canada and the U.S. can rebuild trust as economic partners," Holmes stated.
"The U.S.-Canada economic relationship has long been the envy of the world, benefiting families and workers on both sides of the border. Every day without tariffs represents $3.6 billion in economic gains—but every day with tariffs makes us weaker as allies," he added.
Uncertainty in U.S. Administration
Even within Trump’s own administration, confusion remains over the president’s trade policies. U.S. Commerce Secretary Howard Lutnick admitted earlier Monday that he was unsure of Trump’s ultimate intentions with Canada.
As tensions escalate, business leaders and policymakers in both countries are bracing for further economic turbulence—and hoping for a resolution before lasting damage is done.