Canadian Prime Minister Justin Trudeau has announced a 25% tariff on $155 billion worth of U.S. goods. This decision comes as a direct response to the 25% tariffs imposed by U.S. President Donald Trump on Canadian goods.
What Happened: Trudeau has stated that these tariffs will stay in effect until the U.S. reverses its trade measures, reported BNN Bloomberg. The Canadian tariff plan, announced last month, includes two phases targeting a total of $30 billion in U.S. goods initially. An additional round of tariffs on a wider range of American products, worth $125 billion, is scheduled to take effect in 21 days.
Trump’s initial threat of punitive tariffs on Canadian goods in late November was intended to reduce the influx of illegal migrants and drugs across the border. Despite Canada’s attempts to delay these tariffs, including a $1.3-billion border plan and the appointment of a “fentanyl czar”, Trump confirmed on Monday that Canada will not receive any further reprieves.
According to Reuters, the initial round of retaliation covers over 1200 products, including motorcycles, apparel, wine, coffee, footwear, peanut butter, cosmetics, beer, appliances, spirits, orange juice, and pulp and paper.
Meanwhile, the second tranche could include a diverse selection of U.S. imports including fruits and vegetables, beef, pork, and dairy products, steel and aluminum goods, passenger vehicles and trucks, electric vehicles, and aerospace components.
That being said, Canadian Natural Resources Minister Jonathan Wilkinson is still hopeful of a partnership with the U.S. over critical minerals. Wilkinson stated that his argument to U.S. officials has been that it is much more beneficial to discuss how the U.S. and Canada can support one another.
Why It Matters: The escalating trade war between the U.S. and Canada is a direct result of Trump’s decision to impose 25% tariffs on Canadian imports, as well as 10% duties on energy products from Canada. This move has not only strained relations between the two North American neighbors but also threatens to destabilize the economy.
Ontario Premier Doug Ford has also expressed his readiness to “respond strongly” to Trump’s tariffs, threatening to cut off exports of Ontario nickel, remove American alcohol from liquor store shelves, and cancel provincial government contracts with U.S. companies.
Industry experts and U.S. automakers have opposed Trump’s tariff plans on multiple occasions. At an investor conference in February, Ford F CEO Jim Farley stated “Long term, a 25% tariff across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen.” Similarly, Bernstein Research has determined that Detroit automakers will be especially vulnerable in comparison to their international rivals. According to another research by the Anderson Economic Group, tariffs may increase manufacturing costs per car by $4,000 to over $10,000, based on the vehicle model.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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