Canada has announced retaliatory tariffs against the United States, marking the beginning of a trade war between the neighboring nations.
Prime Minister Justin Trudeau outlined “far-reaching” tariffs of 25%, impacting 155 billion Canadian dollars’ worth ($106.6 billion; £86 billion) of American goods. The targeted products range from beer and wine to household appliances and sporting goods.
This move directly matches U.S. President Donald Trump’s 25% levy on Canadian and Mexican imports to the U.S., along with an additional 10% on Chinese imports. Trump has justified these tariffs by citing concerns over illegal immigration and drug trafficking.
Trudeau emphasized that Canada would “not back down in standing up for Canadians,” but acknowledged that the tariffs would have significant consequences on both sides of the border.
“We don’t want to be here, we didn’t ask for this,” he stated at a news conference late Saturday.
The prime minister announced that tariffs on $30 billion worth of U.S. goods would take effect on Tuesday, with an additional $125 billion in tariffs rolling out within 21 days to allow Canadian businesses time to adjust.
Canada’s Targeted Tariffs
Trudeau’s response includes levies on a variety of American products, including beer, wine, bourbon, fruits, fruit juices, vegetables, perfumes, clothing, shoes, household appliances, sporting goods, and furniture.
Additionally, lumber and plastics will face tariffs, while non-tariff measures related to critical minerals and procurement are also under consideration.
Economists warn that the introduction of U.S. import taxes, coupled with retaliatory measures from Canada, Mexico, and China, could lead to higher prices for consumers across a broad range of products.
A tariff is a tax imposed on imported goods, calculated as a percentage of the product’s value upon entry into a country.
Global Concerns Over U.S. Tariffs
The potential for higher tariffs on imports to the U.S. has alarmed world leaders, as they fear it will drive up costs for businesses operating in the world’s largest economy.
Christopher Sands, director of the Wilson Center’s Canada Institute, told the BBC that reciprocal tariffs between the U.S. and Canada amount to “mutually assured destruction,” with immediate consequences for consumers and businesses.
Justin Trudeau Implement 25% Levy (Photo: Justin Tang)He dismissed the idea of a gradual adjustment period, as recently proposed by U.S. Treasury Secretary Scott Bessent, stating: “Just a massive hit that’s going to make a lot of people’s lives a lot tougher, very quickly.”
Despite the economic risks, tariffs remain central to Trump’s economic strategy. He views them as a means to boost the U.S. economy, protect jobs, and increase tax revenue—while also applying pressure for policy changes.
Economic Ties Between Canada and the U.S.
Canada, Mexico, and the U.S. have deeply interconnected economies, with approximately $2 billion (£1.6 billion) in manufactured goods crossing their borders daily.
Canada is the largest foreign supplier of crude oil to the U.S., accounting for 61% of all oil imported between January and November last year, according to the latest trade data.
While most Canadian imports to the U.S. will face a 25% tariff, energy products will be subjected to a lower 10% tariff.
The White House defended the tariff implementation on Saturday, stating that they were “necessary to hold China, Mexico, and Canada accountable for their promises to halt the flood of poisonous drugs into the United States.”
However, Trudeau refuted claims that the shared border posed a security threat, noting that less than 1% of fentanyl entering the U.S. originates from Canada.
He also pointed out that fewer than 1% of illegal migrants enter the U.S. through the northern border, arguing that tariffs were “not the best way we can actually work together to save lives.”
Escalation and Political Fallout
Trump has signaled his willingness to impose even steeper tariffs if other countries retaliate—something Canada has now done.
In response to U.S. concerns about border security, Canada has already pledged over $1 billion to enhance security along its shared border with the U.S.
Trudeau revealed on Saturday that he has not spoken to Trump since taking office.
Meanwhile, Mark Carney, former governor of both Canada’s and England’s central banks, warned on BBC Newsnight that the tariffs would negatively impact economic growth and drive up inflation.
“They’re going to damage the U.S.’s reputation around the world,” said Carney, who is also a candidate to succeed Trudeau as leader of Canada’s Liberal Party.