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| Canadian Prime Minister Justin Trudeau speaks to an advisory council on Canada-U.S. relations. January 31, 2025 | Photo: Reuters |
Canadian Prime Minister Justin Trudeau has vowed a 'forceful but reasonable' response if U.S. President Donald Trump imposes tariffs on Canadian goods. Speaking at a Canada-U.S. advisory council meeting on Friday, Trudeau acknowledged the coming economic challenges, assuring Canadians that the government is making decisions in their best interest.
Starting February 1, Canadian exports to the U.S. will face a 25% tariff. The White House confirmed that effective this weekend, imports from Canada and Mexico would be subject to these tariffs, while Chinese goods will face a 10% levy. However, Canadian oil will see a lower 10% tariff, set to take effect on February 18.
Trump justified the tariffs on three grounds: preventing illegal immigration, curbing the flow of drugs like fentanyl, and reducing trade deficits with Canada and Mexico.
In response, both Canada and Mexico are considering countermeasures, raising concerns about a potential trade war that could hurt both economies. Business leaders have warned that these tariffs could disrupt global trade and increase costs for American consumers.
Canada, which sends 75% of its exports to the U.S., has historically maintained strong economic ties with its southern neighbor. Trudeau emphasized that while Canada does not seek trade disputes, it will retaliate if necessary.
Ottawa is preparing to impose retaliatory tariffs on $37 billion worth of U.S. exports initially, with potential future tariffs on an additional $110 billion worth of American goods.
Amid the tensions, the Canadian dollar has weakened against the U.S. dollar, raising fears of an economic downturn. Analysts warn that higher import costs could lead to inflation in the U.S. as well, affecting consumers.
With Canada, Mexico, and China accounting for 40% of U.S. imports last year, trade experts predict that the new tariffs could significantly impact American markets, leading to price hikes on a wide range of goods.