4 March: Canadians are facing a new economic reality as U.S. President Donald Trump’s tariffs on Canada and Mexico officially took effect at 12:01 a.m. ET, sparking a continental trade war. The executive order imposes 25% tariffs on Canadian goods, with a lower 10% levy on energy exports.
Trudeau Slams Tariffs as ‘Unjustified,’ Announces Countermeasures
Prime Minister Justin Trudeau condemned the move, calling the tariffs “unjustified”, and confirmed that Canada will retaliate with countermeasures. Canada’s response includes immediate tariffs on $30 billion worth of American goods, with an additional $125 billion in tariffs to follow after 21 days.
“Our tariffs will remain in place until the U.S. withdraws its trade action,” Trudeau stated, emphasizing that Canada remains firm in defending its economy, jobs, and workers.
Economic Impact: Market Slump and Supply Chain Concerns
Trump’s decision triggered an immediate reaction from financial markets, with the S&P 500 dropping 2%, the Dow Jones falling 1.5%, and the Nasdaq slipping 2.6%.
Ontario Premier Doug Ford warned that the tariffs would severely impact supply chains, predicting that auto plants on both sides of the border could shut down within 10 days, resulting in massive job losses. “The market will crash faster than the American bobsled team,” Ford told NBC News, adding that Canada would take strong countermeasures, including restricting the supply of critical minerals and energy to the U.S.
Trump’s Justification and Industry Reactions
Trump justified the tariffs by stating that Canada and Mexico should “build their car plants and other industries in the United States” to avoid trade restrictions.
Industry leaders and unions on both sides of the border condemned the tariffs, with the International Association of Machinists and Aerospace Workers, representing 600,000 workers, urging Trump to reconsider the move to prevent economic damage.
Dan Kelly, president of the Canadian Federation of Independent Business, said the tariffs were being used as a political tool, creating uncertainty and damaging investor confidence.
China and Other Tariff Measures
The trade war extends beyond North America, as Trump doubled tariffs on Chinese imports from 10% to 20%. In response, China announced 15% tariffs on key U.S. farm products, including chicken, pork, soy, and beef.
A report from the Peterson Institute for International Economics estimates that Trump’s tariffs on Canada, Mexico, and China will cost the average U.S. household over $1,200 per year.
Political Fallout and U.S. Response
Trump’s tariff war has sparked criticism from both Democrats and Republicans, with Republican Senator Susan Collins voicing concerns about the economic impact on Maine, which relies heavily on Canada for lobster and blueberry processing.
Despite weeks of diplomatic efforts by Canadian officials in Washington, Trump moved ahead with his economic strategy, which also includes a 25% tariff on steel and aluminum imports starting March 12 and additional duties on automobiles, copper, lumber, and agricultural products from Canada.
As tensions escalate, both countries brace for the economic consequences of this deepening trade dispute.
