Good morning. After months of economic threats, Donald Trump said there is “no room left” to negotiate the punishing tariffs that Canadians have been bracing for. Now, from legislative houses to household budgets, everyone is preparing for the economic impact. There’s lots more to say on trade below, but first:
In the news
Lumber: U.S. plans to nearly triple anti-dumping duty rates against Canadian softwood lumber
DEI: How is RBC navigating Trump’s anti-DEI crusade? Committing to inclusion, but less mention of diversity
The sweet stuff: Canada’s maple syrup industry playing it shy and sanguine in this trade war
On the radar
- To keep up with the most recent trade news, follow our live blog today. Prime Minister Justin Trudeau is expected to detail retaliatory measures this morning.
- British Columbia will table its provincial budget. If Alberta’s budget was any indication, B.C. will also try to estimate the toll of tariffs.
- In the U.S., President Donald Trump addresses a joint session of Congress. Here’s what to watch for in his speech tonight.
- Earnings today include: Target Corp., Best Buy Co., AutoZone Inc., CrowdStrike Holdings Inc. and Pet Valu Holdings Ltd.
Customers grocery shopping in an aisle at the Real Canadian Superstore on March 3, in Toronto.Katherine KY Cheng/Getty Images
Tariff tracker
What to expect
Canada’s most important economic relationship is facing the situation we’ve spent lots of time anticipating: we are effectively in a trade war.
In response to Trump’s punishing levies, Ottawa said they would retaliate with tariffs of their own. Countertariffs took effect at the same time as U.S. tariffs.
U.S. and Canadian stocks fell sharply Monday after Trump confirmed tariffs were moving ahead. The S&P 500 index ended down 1.8 per cent while the Nasdaq Composite was down 2.6 per cent – their worst day of 2025 so far. The Canadian dollar also dropped on Trump’s comments, losing about half a cent to end the day below 69 U.S. cents.
But what is happening today? And tomorrow? And next month? We slow it down with one of The Globe’s economics reporters, Nojoud Al Mallees, who answered some questions on The Decibel about what Trump said he’d do and what tools Canada can use to fight back.
What is actually happening now?
Nojoud: “[Tuesday’s] tariffs are the across-the-board tariffs that were promised a month ago, and then delayed for 30 days, because of a deal that was struck on the border. March 12 – so, next week – is when 25-per-cent tariffs on steel are supposed to come into effect, and that would be presumably layered on top of the 25-per-cent tariffs that ... come into effect on Tuesday.”
And then April tariffs?
Nojoud: “April 2, that’s when the U.S. is supposed to go ahead with what they call reciprocal tariffs, which is essentially matching tariffs on other trade irritants, or sources of what the U.S. calls ‘trade barriers’ – matching them with U.S. tariffs on other countries. So there are minimal tariffs that Canada applies on certain goods. Other countries also do the same, but those are quite small, in our case. The problem with how the U.S. is approaching this is that they’re also looking at things like our goods and services tax as essentially a tariff.”
Why is GST being treated like a tariff?
Nojoud: “Because they say it functions like a tariff, when in reality these taxes are applied on all goods, regardless of where they come from. Canadian goods are subjected to the same sales tax. And so if that’s actually how they’re going to proceed with the reciprocal tariffs, they could be quite significant, given that we have a 5-per-cent GST, and we also have provincial sales taxes, and then you layer on the other tariffs we have, and however else they calculate this, that could be another significant tariff. And so as of right now, presumably that would all be layered on top of each other, which would suggest that we would go north of 50-per-cent tariffs – if, if, if the Trump administration actually follows through with all its threats.”
What do we know about Canada’s countertariffs?
Nojoud: “A month ago, Prime Minister Justin Trudeau announced retaliatory tariffs against the United States when we thought that they were going to go ahead with across-the-board tariffs, and it was tariffs on $155-billion worth of goods. They were targeted in ways to minimize impact on Canada and maximize impact on the U.S. They were targeted at red states, specific goods like Florida oranges and orange juice, for example. And they were staggered. A portion of those tariffs were supposed to come into place quite soon, and the rest would follow in a few weeks.”
What the provinces say
Canada’s provincial governments are readying their responses. We’ve seen budgets that include contingency funds and financial relief for taxpayers.
Speaking to NBC’s Meet the Press Now, the newly re-elected Ontario Premier Doug Ford threatened to shut off Ontario’s electricity exports to the U.S. and to block shipments of high-grade nickel, which he said provides 50 per cent of U.S. supplies.
Saskatchewan Premier Scott Moe said he is now also considering a separate provincial response. He and Alberta Premier Danielle Smith have spoken out against using their provinces’ natural resources in a trade war.
Last month, Quebec Premier François Legault said the province was putting together programs to help companies grow and diversify their markets. Before the 30-day pause, he had also announced a series of retaliation measures, including removing U.S. liquor from shelves.
A drone views shows the concrete blocks which mark the international border between the U.S. state of Vermont and the Canadian province of Quebec, near Alburgh, Vermont, U.S., January 20, 2025.Carlos Osorio/Reuters
Could Americans finally be getting nervous?
Trump’s treat to blow up decades of continental economic integration was initially met by a shrug from U.S. investors and businesses. But this optimism has faded as the President has barrelled toward a trade war.
“I think we’re going to start to see that uncertainty and the impact of tariffs start to show up fairly gradually in the U.S. data,” Ali Jaffery, senior economist at Canadian Imperial Bank of Commerce, told economics reporter Mark Rendell, who writes that Americans are waking up to the tariff fallout.
The latest inflation data, published Friday, showed a slight cooling in the U.S. Federal Reserve’s preferred Personal Consumption Expenditures price index. It also showed an unexpectedly large pullback in consumer spending. Jaffery expects uncertainty will weigh on manufacturing employment, which we’ll learn more about in this Friday’s jobs report.
Keep reading
- Canadian factory activity falls for first time in six months in February as tariff uncertainty hits sentiment
- Minutes after new U.S. tariffs came into force against a slate of Chinese goods, Beijing hit back by imposing 10- to 15-per-cent levies against U.S. agricultural goods and foodstuffs.
- Tony Keller: Trump is all about the feelings. That’s why he’s so hard to negotiate with
- Opinion: If Trump really is an existential threat to Canada, Indigenous peoples need to be involved in the response
Charted
Alberta has been rocked by electricity bill increases
An analysis by The Globe and Mail has found that between January, 2020, and the end of last year, residential power costs rose more than 40 per cent in Alberta. But the reasons for Alberta’s surging electricity prices over the past five years are complex.
Roughly a quarter of a century ago, the province sought to establish a competitive marketplace by deregulating its electricity sector. But deregulation isn’t the only culprit for the price jump. It was also driven by the transition from coal to natural gas, and a higher demand for electricity, owing to climate change (hotter summers mean more air conditioning).
The provinces with the lowest rate increases do have something in common: All of them generate the majority of their electricity using hydro dams, the majority of which were built and paid for decades ago.
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Morning update
Global stocks slid after the United States hit Canada, Mexico and China with steep tariffs, launching new trade conflicts with the top three U.S. trading partners. Wall Street futures and TSX futures pointed lower after North American markets fell sharply yesterday on tariff nerves.
Overseas, the pan-European STOXX 600 was down 1.44 per cent in morning trading. Britain’s FTSE 100 slid 0.47 per cent, Germany’s DAX dropped 2.4 per cent and France’s CAC 40 declined 1.45 per cent.
In Asia, Japan’s Nikkei closed 1.2 per cent lower, while Hong Kong’s Hang Seng slipped 0.28 per cent.
The Canadian dollar traded at 69.36 U.S. cents.