US warns of reciprocal tariffs, saying Canada's high duties on dairy and lumber will face equal retaliation
US President Donald Trump has threatened to impose reciprocal tariffs on Canadian dairy and lumber products, citing what he called “tremendously high” tariffs imposed by Canada.
According to BNN Bloomberg, Trump stated from the Oval Office that Canada has been “ripping us off for years” on these goods and warned that the US would impose matching tariffs unless Canada lowers its own.
He indicated that these tariffs could be enacted as early as Friday or delayed until Monday or Tuesday.
Trump also highlighted India’s high tariff rates but noted that the country had agreed to reduce its import duties. Meanwhile, his administration temporarily suspended the 25 percent tariffs imposed earlier in the week on most goods from Canada and Mexico.
In an interview with Fox Business Network, Trump explained that the one-month reprieve applied to goods compliant with the US-Mexico-Canada Agreement (USMCA) to assist automakers.
However, he emphasized that this was a short-term measure and that tariffs could increase over time.
The reciprocal tariff policy is set to take effect on April 2, when the US will impose duties matching those levied by Canada and Mexico.
While the USMCA eliminated most tariffs on North American trade, CNN reported that Canada’s high dairy tariffs remain an exception aimed at protecting domestic farmers.
Trump stated that “April 2nd, it becomes all reciprocal. What they charge us, we charge them.”
Canadian officials criticized Trump’s tariff threats. As per CNN, Trade Minister Mary Ng called his claim that Canada was “ripping off” the US “not true” and described the proposed tariffs as “completely unjustified.”
Industry Minister François-Philippe Champagne echoed these concerns, telling CNBC that it was unclear what Canada needed to do to avoid the tariffs.
“It seems that the goal posts keep moving, and that’s what makes it difficult,” Champagne said.
He added that Canada was open to renegotiating the USMCA when scheduled in 2026 but emphasized the need for stability in trade relations.
White House economic adviser Kevin Hassett stated that the suspended 25 percent tariffs on Canadian and Mexican goods remain in place to pressure both countries to curb fentanyl shipments into the US.
According to CNN, he warned that if progress on the issue is insufficient, the tariffs would remain in place beyond April 2, in addition to any reciprocal tariffs.
White House trade adviser Peter Navarro told CNBC that the US would match not only tariff rates, but also non-tariff barriers imposed by other countries.
He stated that US tariff adjustments would reflect “the unfairness embedded in the higher tariffs and non-tariff barriers that countries impose on us.”
The tariffs would be determined through industry- and country-specific investigations.
When asked in the Fox Business Network interview about the potential for predictability in his tariff policy, Trump responded: “Well, I think so. But, you know, the terms could go up as time goes by.”
Markets initially reacted negatively to Trump’s tariff threats but rebounded after US Federal Reserve Chair Jerome Powell delivered an optimistic economic outlook.
CNN reported that the Dow Jones Industrial Average closed up 222 points (0.5 percent), the S&P 500 rose 0.6 percent, and the Nasdaq, which had been in correction territory, gained 0.7 percent.
However, analysts expressed concerns about ongoing economic uncertainty caused by the shifting trade policies.
US dairy farmers have long criticized Canada’s high tariffs on dairy imports, which can reach 241 percent on milk. CNN noted that these tariffs, part of Canada’s supply management system, only take effect when US dairy exports exceed a certain quota.
Despite these concerns, a 2023 trade dispute panel ruled in Canada’s favour, finding that the tariffs did not violate the USMCA. US dairy industry representatives have urged both governments to negotiate a resolution to trade barriers and tariffs.
Lumber tariffs have also become a major point of contention. Trump signed an executive order emphasizing the US’s domestic timber supply, stating that the country has “an abundance of timber resources” to meet demand.
However, as per CNN, industry experts warn that imposing new tariffs on Canadian lumber could raise housing costs.
The US sources approximately 30 percent of its softwood lumber from Canada, and the industry already faces countervailing and anti-dumping duties of 14.5 percent.
As reported by The Wall Street Journal, Canfor, a major North American lumber producer, confirmed that its Canadian sawmills’ shipments to the US are temporarily exempt from Trump’s 25 percent tariffs.
The company’s CEO, Susan Yurkovich, stated that their legal advisors and customs brokers have confirmed the exemption.
However, with Trump’s renewed threats to impose fresh tariffs on lumber and dairy, the situation remains uncertain.
Canfor already pays duties of 16.6 percent on Canadian lumber exports to the US, with rates expected to rise beyond 40 percent this year.
BNN Bloomberg reported that the US argues that Canada’s ownership of its timberlands provides an unfair subsidy, an ongoing dispute that has led to increasing trade restrictions.
