Canada and Mexico hit back with tariffs as Trump cites fentanyl and trade deficits to justify new duties
US President Donald Trump has imposed tariffs on Canada, Mexico, and China, citing concerns over fentanyl trafficking and illegal immigration.
The move has sparked immediate backlash, with Canada and Mexico vowing retaliatory measures, and China announcing plans to challenge the tariffs at the World Trade Organization (WTO).
During a press conference in the Oval Office on Friday, Trump stated there was “nothing” Canada could do to prevent the tariffs from being imposed.
When asked if he was seeking concessions from Canada, China, or Mexico, he replied, “No, nothing. Not right now. No.”
He later added, “We’ll just see what happens.”
White House Press Secretary Karoline Leavitt reiterated Trump’s stance, claiming that “massive amounts of fentanyl” were entering the US from Canada.
Leavitt stated, “The president will be implementing a 25 percent tariff on Mexico, 25 percent tariffs on Canada, and a 10 percent tariff on China for the illegal fentanyl that they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans.”
Trump also cited a US trade deficit with Canada as a justification for the tariffs. “(Canada has) treated us very unfairly, and I say why should we be subsidizing Canada?” he said.
However, BNN Bloomberg reported that in 2024, the US deficit with Canada was estimated to be around US$45bn, according to TD Economics. The report noted that Trump’s figure of US$200bn was “roughly four to five times the officially reported statistics.”
The US president signed three executive orders formalizing the tariffs, which impose a 25 percent duty on most imports from Canada and Mexico and a 10 percent duty on Chinese goods.
Trump justified the tariffs by declaring a national emergency under the International Emergency Economic Powers Act (IEEPA), giving him broad authority to impose economic restrictions.
Reuters reported that the White House provided no specifics on how the tariffs might be lifted, stating only that they would remain in place until the crisis is “alleviated.”
Canada and Mexico immediately announced their own tariff measures in response.
Prime Minister Justin Trudeau announced that Canada would impose 25 percent tariffs on US$155bn worth of US goods, including beer, wine, lumber, and appliances.
The retaliatory measures will be rolled out in phases, with US$30bn taking effect Tuesday and the remaining US$125bn three weeks later.
Trudeau warned that Trump’s tariffs could lead to higher grocery and gas prices for Americans and impact US industries dependent on Canadian resources, such as nickel, potash, uranium, steel, and aluminum. He also urged Canadians to avoid traveling to the US and to boycott US products.
“We won’t relent until tariffs are removed,” Trudeau stated. “I won’t sugar-coat it. Our nation could be facing difficult times in the coming days and weeks.”
Mexican President Claudia Sheinbaum also responded, stating that she had directed her economy minister to implement retaliatory tariffs.
“I instruct the economy minister to implement Plan B that we have been working on, which includes tariff and non-tariff measures in defense of Mexico’s interests,” she posted on X.
According to Business Insider, Mexico and Canada are working together to counter the US tariffs.
Trump also announced additional tariffs on Canadian oil and gas, initially planned at 25 percent but later revised to 10 percent.
“I’m probably going to reduce the tariff a little bit on (oil). We think we’re going to bring it down to 10 percent on the oil,” he stated.
The US is the primary buyer of Canadian crude oil, importing 4.3 million barrels per day as of October 2024, according to the US Energy Information Agency.
Alberta Premier Danielle Smith has been advocating for oil and gas exemptions from the tariffs, with her press secretary stating that “any tariffs imposed by the US on Canadian goods will hurt American and Canadian consumers, workers, and businesses.”
Trump has also promised new tariffs on steel and aluminum but has not provided details on which countries will be affected or when they will be implemented.
Canada has been working to mitigate the impact of the tariffs through diplomatic efforts.
Foreign Affairs Minister Mélanie Joly stated that the government has yet to receive “any form of pure decision-making” or “any form of specific details coming from the White House regarding (Trump’s) comments.”
Despite a US$1.3bn border security plan aimed at addressing US concerns, Trump has continued to criticize Canada’s handling of migration and fentanyl trafficking.
According to US Customs and Border Protection (CBP), 24,000 migrant encounters occurred along the Canada-US border between October 2023 and September 2024, significantly lower than the 1.5 million recorded at the US-Mexico border in the same period.
The CBP also reported that only 43 lbs of fentanyl were seized at the northern border compared to 21,148 lbs at the southern border.
The economic impact of the tariffs could be severe. Analysis from the Canadian Chamber of Commerce suggests a 25 percent tariff could shrink Canada’s GDP by 2.6 percent and cost Canadian households an average of US$1,900 annually.
In the US, it could result in a 1.6 percent GDP drop and cost households an average of US$1,300.
“We will see jobs affected by this. We will see employers really, really struggling,” said Matthew Holmes, public policy chief for the Canadian Chamber of Commerce.
BNN Bloomberg reported that the federal government is considering a stimulus package to support businesses, though the scale of relief will depend on the scope of Trump’s tariffs.
Meanwhile, some Canadian provinces are taking independent action.
The New York Times reported that British Columbia, Nova Scotia, and Ontario will ban American alcohol from state-run liquor stores, with BC specifically targeting products from Republican states.
BC Premier David Eby described Trump’s tariffs as “a complete betrayal of the historic bond between our countries.”
Legal experts suggest that Trump’s use of IEEPA to impose tariffs is unprecedented and could face legal challenges.
The Globe and Mail reported that previous presidential actions under IEEPA have focused on sanctions rather than tariffs. Legal scholars argue that courts could challenge whether Congress granted Trump the power to impose trade duties under this law.
However, the conservative US Supreme Court, which has struck down executive actions under the “major questions doctrine,” might be reluctant to curb presidential authority on trade matters.
While Canada has the option to challenge the tariffs at the WTO, legal experts cited by The Globe and Mail note that the lack of a functioning appellate body at the WTO, due to US opposition to appointments, could render any ruling ineffective.
Columbia Law School professor Petros Mavroidis stated, “In a WTO complaint, quite frankly, hands down, Canada wins. This is an open-shut case.” However, with no working appeals system, Canada may have little recourse beyond direct negotiations with the US
Trump has previously warned that if Canada, Mexico, or China retaliate, he will escalate tariffs further.
Reuters reported that his administration has already indicated plans for additional tariffs on steel, aluminum, semiconductor chips, and pharmaceuticals.
With US tariff collections set to begin at 12:01 am Tuesday, the escalating trade dispute could have long-term consequences for North American economic relations.
