Canada has retaliated with 25% tariffs on US goods worth C$150 billion in retaliation to US President Donald Trump’s 25% tariffs on Canada and Mexico
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As US tariffs came into effect on Tuesday, Canada imposed retaliatory 25 per cent tariffs on US goods worth C$150 billion that will come into effect in two phases.
After
Trump ruled out any scope of delay on Monday, 25 per cent tariffs on goods from Canada and Mexico and 10 per cent more tariffs on Chinese goods came into effect on Tuesday. The tariffs on China are on the top of 10 per cent previously imposed on February 4.
In the first phase of Canada’s retaliatory tariffs, 25 per cent tariffs on around C$30 billion ($20.6 billion) worth of US goods came go into effect at 12:01 am on Tuesday and, in the second phase, 25 per cent tariffs will be imposed on US goods such as cars, trucks, steel, and aluminum worth C$125 billion over the next three weeks, according to Bloomberg.
As Canada retaliated, Prime Minister Justin Trudeau said his country “will not let this unjustified decision go unanswered”.
Trudeau further said, “Our tariffs will remain in place until the US trade action is withdrawn, and should US tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures.”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 said that tariffs will come into effect at midnight unless Trump dropped US levies.
China also retaliated with 15 per cent tariffs on US chicken, wheat, corn, and cotton, and 10 per cent tariff on US soybeans, sorghum, pork, beef, aquatic products, fruits, vegetables, and dairy imports. These tariffs will come into effect on March 10. China also put 25 US firms under export and investment restrictions.
Trump on Monday said that there was no way that tariffs could be delayed. He had previously delayed tariffs on Canada and Mexico last month by 30 days.
Shortly after winning the 2024 election,
Trump had announced he would impose 25 per cent tariffs on Canada and Mexico and 10 per cent on China for their failure to check the flow of illegal immigrants and fentanyl into the United States from their soil. For Canada, energy imports will be tariffed at 10 per cent instead of 25 per cent.
Bloomberg noted that the emerging tariff war will eventually affect around $900 billion worth of goods and services.
The Bank of Canada has said that a prolonged tariff war could squeeze the Canadian economy by around 3 per cent over two years and wipe out growth. Canada is expected to be hit hardest as Trump’s 25 per cent tariffs on steel and aluminium going into effect on March 12 will particularly affect Canada as Canada is the largest exporter of steel and aluminium to the United States.
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Demand for Canadian goods in the United States would suffer, exporters would cut production and jobs, prices for products imported from the United States would rise, and consumers and businesses would spend less, said the Bank of Canada, as per Bloomberg.
The impact of the tariffs will also be felt on the United States as
increased costs of imports will be passed on to customers by companies.
Erica York, the Tax Foundation’s Vice President of Federal Tax Policy, told Yahoo News that Trump’s actions so far are “a $130 billion annual tax increase on Americans” that could increase average household’s expenses by $1,000.
Separately, Moody’s Analytics Chief Economist Mark Zandi said, “The economy appears to be gagging on the uncertainty created by the haphazard economic policymaking happening in DC.
Zandi listed a range of factors, such as “tariff wars, DOGE cuts to jobs and government programs and agencies, and deportations [that] are sowing confusion, which puts a pall on investment, hiring and spending”.