Canada tariffs: Trudeau hits back against Trump with 25% levy

Canada has announced retaliatory tariffs against the United States, marking the start of a trade war between the two neighboring countries. Canadian Prime Minister Justin Trudeau announced "far-reaching" tariffs of 25% on $155 billion Canadian dollars (about $106.6 billion USD) worth of American goods, including items such as beer, wine, household appliances, and sporting goods.

This move is in response to US President Donald Trump's imposition of 25% tariffs on imports from Canada and Mexico, as well as 10% tariffs on Chinese goods, which Trump justified with concerns about illegal immigration and drug trafficking. Trudeau stated that he "will not back down when it comes to defending the interests of Canadians," but warned that this will have real consequences for people on both sides of the border.

"We didn't want to get to this point, we didn't ask for this," Trudeau said at a news conference late Saturday. He added that the tariffs on $30 billion Canadian dollars worth of US goods will take effect on Tuesday, with an additional $125 billion in tariffs going into effect in 21 days to give Canadian businesses time to adjust. Trudeau's countermeasures target items including American beer, wine, bourbon, fruits and juices, vegetables, perfumes, clothing and footwear, as well as household appliances, sporting goods, and furniture.

In addition, lumber and plastics will also face tariffs, and non-tariff measures are being considered for critical minerals and procurement. Economists warn that US import taxes, along with responses from Canada, Mexico, and China, could lead to higher prices for consumers across a range of products. Tariffs are domestic taxes imposed on goods entering a country, proportional to the value of the imported goods. The prospect of the US imposing higher tariffs on imported goods has worried many world leaders as it would increase the cost for businesses to sell their goods in the world's largest economy.

Christopher Sands, director of the Canada Institute at the Wilson Center, told the BBC that the tit-for-tat tariffs between the US and Canada are "mutually assured destruction" and will soon affect people's lives. He said there will be no adjustment period, as recently suggested by US Treasury Secretary Scott Bessent: "This is just a huge hit, and it's going to make life harder for a lot of people very quickly." But these tariffs are a core part of Trump's economic vision. He sees them as a way to grow the American economy, protect jobs, and increase tax revenues, and in this case, to push for policy action.

The economies of Canada, Mexico, and the US are highly integrated, with an estimated $2 billion worth of manufactured goods flowing across borders daily. Canada is the largest foreign supplier of crude oil to the US. According to the latest official trade data, 61% of US oil imports from January to November last year came from Canada. While goods imported to the US from Canada face a 25% tariff, its energy faces a lower 10% tariff. The White House said on Saturday that the tariffs are "necessary to hold China, Mexico, and Canada accountable for their promises to stop dumping toxic drugs into the United States."

But Trudeau refuted the claim that the shared border poses a security concern, stating that less than 1% of fentanyl entering the US comes from Canada. He also added that less than 1% of illegal immigrants enter the US through the border, and that tariffs are "not the best way we can actually work together to save lives." Trump has indicated that he is prepared to escalate tariffs further if these countries retaliate against his tariffs, as Canada has done. Prior to announcing the tariffs, Canada had pledged over $1 billion to strengthen its shared border security with the US.

Trudeau stated on Saturday that he has not spoken with Trump since he took office. Former Bank of Canada and Bank of England Governor Mark Carney said in an interview with BBC Newsnight on Friday that the tariffs will hit economic growth and drive up inflation. "They will damage the reputation of the US around the world," said Carney, who is also one of the candidates to replace Trudeau as leader of the Liberal Party of Canada.