The North American trade war of 2025 has officially begun with Canada hitting back against the U.S. after President Donald Trump imposed punishing 25 per cent tariffs on virtually all Canadian goods just after midnight.
Trump’s tariffs will upend trade relations between two countries that, for decades, were close partners and friends. The tariffs, which will apply to everything Canada sends south, could lead to job losses, economic devastation, higher inflation and hurt feelings on both sides of the border.
Prime Minister Justin Trudeau has already slapped tariffs on an initial tranche of $30 billion worth of American goods and promised $125 billion more will face levies in three weeks’ time.
Trudeau will make a speech shortly about what else the federal government has planned to fight back against Trump’s efforts to try and torpedo the Canadian economy.
In his statement last night announcing Canada’s initial response, Trudeau suggested the federal government is prepared to go beyond counter-tariffs alone to try and get Trump to back down from tariffs that have the potential to plunge not only the Canadian economy into a recession but also inflict economic pain on American businesses and the workers they employ.
“Canada will not let this unjustified decision go unanswered,” Trudeau said in his media statement.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” he said.
The premiers are already promising provincial countermeasures of their own, including pulling American liquor off store shelves, hiking road tolls for American commercial drivers and blocking U.S. firms from bidding for government procurement contracts to try and force Trump to reverse course.
Ontario Premier Doug Ford has said he is prepared to go through with some more draconian measures, including possibly cutting Ontario energy exports that power some 1.5 million customers in the U.S. The province’s energy minister, Stephen Lecce, also floated levying an export charge on every megawatt of power Ontario sells to the U.S.
In an interview with CNN, Ford said Canadians are “absolutely livid,” there’s a swell of Canadian patriotism as shoppers boycott American products and his government will use every tool in the toolbox to hit back against “the one man” who has ruined what was once the best bilateral relationship in the world.
Pointing to the plunging U.S. stock indexes, Ford said he hopes Trump pulls back now that the “market is going to go downhill faster than the American bobsled team.”
Vance says Trump will have ‘conversations with the Canadians’
Vice-President J.D. Vance told reporters on Capitol Hill Tuesday that the president is “going to have conversations with the Canadians.”
“We need to see real engagement on the fentanyl issue. That is fundamentally the underlying element for tariffs. The Canadians have not been serious about stopping the drug trade,” Vance claimed.
Despite Vance’s assertions, the Canadian government has been busy rolling out a $1.3 billion border security package designed to curb the illegal drug trade and the flow of migrants — and that’s already producing results.
Data from the U.S. Customs and Border Protection (CBP) released earlier this month shows there has been a significant decrease in seizures of fentanyl coming from Canada.
The CBP’s own data registered a 97 per cent drop in January compared to December 2024 at the northern border — evidence, the Canadian government says, that its new border security measures are bearing fruit and the Americans are being unreasonable.
In addition to appointing a fentanyl czar whose only job is to lead a nationwide crackdown on the deadly drug, the federal government has also deployed some 10,000 border and law enforcement personnel along the Canada-U.S. boundary and sent new helicopters and drones into the skies to keep a closer eye on the 49th parallel.
Even before these new efforts, Canada represented less than one per cent of all seized fentanyl imports into the U.S., according to federal data. About 19.5 kilograms was seized at the northern border last year compared to 9,570 kilograms at the southwestern border, according to the U.S. government data.
Lana Payne, the president of Unifor, Canada’s largest private-sector union, issued an “economic call-to-arms” in what she’s calling “a full-on trade war.”
“Every Canadian politician, business leader, worker and resident must fight back. Trump has seriously misjudged the resolve and unity of Canadians, and he has misjudged how damaging this trade war will be for American workers,” she said.
Trump’s tariff will make most Canadian goods less competitive because American importers will now have to pay the U.S. government a 25 per cent levy to bring them into the country.
Those added costs could then be passed on to American consumers, pushing up the price of everything from car parts and fertilizer to pharmaceuticals and paper products.
Some importers may decide to drop certain Canadian products altogether, putting pressure on Canadian businesses and the people they employ.
Industry groups are already warning of dire consequences. Canadian Manufacturers and Exporters said Trump’s tariffs “threaten the future of the most successful economic relationship in the world.” The Canadian Federation of Independent Business called the brewing trade war “a massive economic threat.” The Grain Growers of Canada said the trade war “could push many family farms to the brink.”
Global Automakers of Canada, the industry group that represents 25 carmarkers like BMW and Honda, said Trump has to quickly lift his tariffs “to avoid permanent and significant damage to the North American automotive sector.”
The Business Council of Canada said Trump’s actions have left the trilateral trade deal that he himself negotiated in his first term, the Canada-U.S.-Mexico Agreement (CUSMA), in tatters. “No one wins in a trade war and the tariffs imposed today by the Trump administration will hurt workers, farmers and families,” the council said.
