The Canadian government announced counter-tariffs on CA$155 billion worth of U.S. imports.
President Donald Trump has reacted to Canada’s decision to enter a trade war with the United States by imposing counter-tariffs, saying this will lead to his administration imposing reciprocal tariffs.
“Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!” Trump said on his Truth Social platform on March 4, with the reference to “Governor Trudeau” part of his ongoing “51st state” rhetoric.
Trump’s executive order of Feb. 1 imposing duties on Canada says that if the country retaliates with tariffs or similar measures, the president may “increase or expand” the U.S. tariffs to “ensure the efficacy of this action.”
Along with this order, the Trump administration is also conducting a review of all countries’ trade practices with the United States in order to impose reciprocal tariffs. Trump said related details will come on April 2.
Trump’s comments on Canadian Prime Minister Justin Trudeau relate to the United States slapping 25 percent tariffs on imports from Canada and Mexico on March 4, with Canadian energy products subject to 10 percent import duties.
The president said the tariffs have been imposed because the two countries have not dealt adequately with the issue of fentanyl, a potent synthetic opioid responsible for thousands of deaths in the United States and Canada.
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In response, the Canadian government announced matching tariffs on CA$155 billion worth of U.S. imports, with a first phase of CA$30 billion being implemented immediately and an additional CA$125 billion in 21 days if the U.S. measures are still in place.
The first phase of Canadian tariffs target a broad list of U.S. goods with a 25 percent surtax, ranging from orange juice to motorcycles.
Two other sets of tariffs could be imposed on Canada within the next month, including U.S. tariffs on steel and aluminum set to kick in on March 12, and the reciprocal tariffs planned for April 2.
The reciprocal tariffs could hit as the Trump administration has raised concerns about Canada’s federal sales tax, the GST, its Digital Services Tax affecting U.S. tech giants, and its supply management system for products like dairy and eggs which protects the sector from foreign goods.
“Canada has a national sales tax, another way to say it is a national tariff on our products,” Commerce Secretary Howard Lutnick told CNBC on March 4. Lutnick also suggested the administration wants to bring car manufacturing back to the United States, as the supply chain is currently tightly integrated with Canada.
“Why do we produce cars in Canada? They’ve had an invitation, Canada and Mexico had an invitation to trade with the amazing economy the United States of America, and they have abused that invitation, and the president is going to reset that,” Lutnick said.
Border Pause Expired
Canada and Mexico had first obtained a 30-pause on the border security-related tariffs as the Trump administration assessed measures taken to address its concerns around drug trafficking and illegal migration. Mexico said it was sending 10,000 troops to the border and Canada announced a $1.3 billion border plan, along with other measures targeting criminal networks.
Trump was asked by reporters on March 3 whether there’s anything the countries could do to avoid the tariffs this time and he responded that there was “no room left for Mexico or for Canada.”
Trudeau said this comment by Trump indicates the tariffs are not about really about stopping fentanyl.
“I think in what President Trump said yesterday, that there is nothing Canada or Mexico can do to avoid these tariffs, underlines very clearly what I think a lot of us have suspected for a long time, that these tariffs are not specifically about fentanyl,” Trudeau said at a press conference in Ottawa on March 4.
Trudeau suggested that Trump is instead using tariffs to provoke a “total collapse of the Canadian economy, because that’ll make it easier to annex us.”
After Trudeau met Trump in Mar-a-Lago in late November 2024 to discuss the tariff threat, the president has repeatedly said that Canada should become the 51st U.S. state, where it could benefit from lower taxes and military protection.
Canadian politicians of all stripes have rejected the idea outright. With the ruling Liberal Party undergoing a leadership contest to replace Trudeau, and Canada likely going into a general election soon, Trump’s tariffs have become a central political issue with parties vying to present themselves as the best choice to protect the country.
