Canada Fires Back at US Tariffs with Sweeping Retaliatory Measures

The Canadian government has announced a sweeping package of counter-tariffs against US-made products in response to President Donald Trump's decision to impose tariffs on Canada and Mexico, Bloomberg reports.

Prime Minister Justin Trudeau, in a statement late Monday, vowed to retaliate against the US tariffs, echoing his February announcement following Trump's initial executive order.

"Canada will not let this unjustified decision go unanswered," Trudeau stated.

The first stage of Canada's countermeasures will involve 25% tariffs on approximately C$30 billion (US$20.6 billion) worth of goods from US exporters. These tariffs will come into effect at 12:01 a.m. EST unless the US rescinds its tariffs.

A second round of tariffs at the same rate will be imposed on C$125 billion worth of goods three weeks later, including items like cars, trucks, steel, and aluminum.

"Our tariffs will remain in place until the US trade action is withdrawn, and should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures," Trudeau added.

Trump's decision to impose tariffs on Canada and Mexico, stemming from his concerns about illicit drug flows, is expected to disrupt one of the world's largest bilateral trade relationships, worth over US$900 billion annually. Canada is the leading buyer of US goods, and vice versa.

The Canadian dollar and stock market have reacted negatively to the news, with the benchmark S&P/TSX Composite Index falling 1.5%, its largest drop since December 18. Traders have increased their bets on a Bank of Canada interest rate cut at its March 12 meeting.

"Businesses on both sides of the border have already been damaged by the uncertainty coming from President Trump's drip-drip-drip of tariff threats," said Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce, in a statement.

The Bank of Canada has warned that a prolonged tariff war could permanently reduce Canadian output by nearly 3% over two years, potentially "wiping out growth" during that period.

Trudeau, who is set to leave office soon, returned from a trip to London, where he met with UK Prime Minister Keir Starmer and other leaders.

Beyond tariffs, Canada's provinces are also prepared to retaliate. Ontario Premier Doug Ford, in a statement following the news, threatened to limit or eliminate US companies from government contracts, including ending his province's contract with Starlink, the Elon Musk-controlled satellite network. He also threatened to cut off nickel exports to the US.

"A tariff on Canada is a tax on Americans," Ford stated. "If they're going to try to annihilate Ontario, I will do everything—including cutting off their energy—with a smile on my face. I'm encouraging every other province to do the same."

Canadian cabinet ministers, provincial premiers, and other policymakers have repeatedly traveled to Washington in recent weeks to discuss the border issue and urge US lawmakers and members of Trump's team to reconsider the tariffs.

Foreign Minister Mélanie Joly acknowledged that while there have been positive conversations with the Trump administration, "there's a level of unpredictability and chaos that comes out of the Oval Office and we will be dealing with it."

Immigration Minister Marc Miller also warned that the tariffs will be painful for the Canadian economy.

"We will have to bring the fight and it will hurt Americans as well," Miller stated. "It's important to reiterate that 35 of those states, their primary trading partner is Canada, so it will hurt them. And we hope the logic will prevail."