Ottawa hits back with billions in countermeasures as Trump threatens more tariffs in escalating trade conflict
Prime Minister Justin Trudeau said US President Donald Trump’s decision to impose 25 percent tariffs on all Canadian products was intended to bring about the “total collapse” of Canada’s economy to facilitate annexation, according to Financial Post.
Speaking on the morning the US tariffs and Canada’s retaliatory duties took effect; Trudeau called the move a “really dumb thing to do” and pledged that Canada would fight back as long as necessary.
“It’s not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you’re a very smart guy, this is a very dumb thing to do,” he said.
At 12:01 am ET on Tuesday, Trump’s order imposed a 10 percent tariff on Canadian energy and a 25 percent levy on all other imports.
In response, Canada immediately enacted tariffs on $30bn worth of US goods, with a second wave of $125bn in tariffs set to follow within 21 days.
“There are no winners in a trade war,” Trudeau warned, adding that the economic impact would be “tough” for both Canadians and Americans.
Despite the escalation, US Commerce Secretary Howard Lutnick suggested late Tuesday that the tariffs might not last.
Speaking to Fox Business, he said Trump could announce an adjustment for Canada and Mexico “sometime” on Wednesday.
“I think he’s gonna work something out with them. It’s not gonna be a pause, none of that pause stuff. But I think he’s gonna figure out, ‘you do more, and I’ll meet you in the middle someway’,” Lutnick said, suggesting that a compromise might be reached.
Trump justified the tariffs by pointing to the flow of fentanyl and migrants over US borders with Canada and Mexico, urging both countries to strengthen border security.
Canadian officials countered that less than one percent of fentanyl entering the US originates from Canada but have nonetheless engaged with US officials to address concerns.
Trudeau publicly rejected Trump’s reasoning, calling the legal justification for the tariffs “completely false.” He accused Trump of seeking to damage Canada’s economy to make annexation easier.
“The one thing he has said repeatedly that what he wants is to see a total collapse of the Canadian economy because that will make it easier to annex us,” Trudeau stated.
“That’s never going to happen. We will never be the 51st state. But yeah, he can do damage to the Canadian economy, and he started this morning, but he is rapidly going to find out, as American families are going to find out, that that’s going to hurt people on both sides of the border,” he added.
Conservative Leader Pierre Poilievre condemned Trump’s move, saying, “Trump had stabbed America’s best friend in the back.” He called for the government to use tariff revenue to compensate affected workers and introduce tax cuts for impacted businesses.
Poilievre also urged the elimination of the consumer carbon tax and reversal of the capital gains inclusion rate increase from the last budget.
He further called on provinces to remove internal trade barriers.
“All of these things were conservative fixations before the tariffs. Now they are even more necessary, but none of these things have happened in the last 100 days since Trump first launched his tariff threats,” he said.
While criticizing the government’s handling of border security and the opioid crisis, Poilievre dismissed Trump’s justification for the tariffs.
“Let’s be clear, that is not a justification for tariffs. But we have guns, drugs and illegal migrants coming from the United States to Canada. We have never tariffed the Americans for that. If the president wants to fight fentanyl, I agree with him, but I would do it not for President Trump. I would do it for Canadians,” Poilievre said.
NDP Leader Jagmeet Singh called on Trudeau to recall Parliament—prorogued since early January—for an emergency debate. He softened his previous calls to force an election, stating that MPs needed to first secure worker support.
“We are in what could be worse than the pandemic in terms of the impacts on our economy and to workers. So we need across the board supports for workers impacted,” Singh said.
He called for Employment Insurance (EI) reforms to expand eligibility and speed up processing times. “In the crisis we find ourselves, we need an Employment Insurance that works,” he said.
“We also need faster access, because right now there is a delay that is too long… and the amount that people receive to replace their salary is not adequate for the cost of living,” Singh added.
As Trudeau confirmed Canada’s response, Trump warned of further tariff hikes.
“Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the US, our Reciprocal Tariff will immediately increase by a like amount!” he wrote on social media.
After months of negotiations to avoid a trade war, Trudeau stated there was “never” a way to prevent the tariffs. He said the government’s priority is now on getting them lifted while providing support for affected businesses and workers.
“Our priority has to be not on figuring out how to manage through these tariffs over the coming days and weeks and months, but on doing everything we can to get them lifted and put an end to this unjustified trade war that hurts American families and Canadian families,” Trudeau said.
He also confirmed that federal and provincial governments were considering additional non-tariff measures if the trade war continues.
During his speech, Trudeau directly addressed Americans, Canadians, and Trump, whom he referred to as “Donald” in apparent mimicry of Trump’s habit of calling him “Justin.”
“We don’t want this. We want to work with you as a friend and ally, and we don’t want to see you hurt either, but your government has chosen to do this to you,” he told Americans.
To Canadians, he warned that the trade war would be difficult and said the government was working on support measures.
“We will use every tool at our disposal so Canadian workers and businesses can weather this storm, from expanding EI benefits and making them more flexible to providing direct supports to businesses,” Trudeau said.
Reaction to the tariffs was swift. Provincial premiers expressed dismay at Trump’s move and voiced support for Ottawa’s response.
Business groups on both sides of the border warned that workers would be the ones to suffer.
“Today’s reckless decision by the US administration is forcing Canada and the US toward recessions, job losses and economic disaster,” said Candace Laing, president and CEO of the Canadian Chamber of Commerce.
“The US government’s self-defeating tariff policy disregards decades of success and trillions in trade to try and revive a failed economic model from the 1800s. Tariffs are a tax on the American people,” she said.
The US Chamber of Commerce urged an end to the tariffs, arguing that they would “only raise prices and increase the economic pain being felt by everyday Americans across the country.”
