Customers are urged to buy Canadian products at B.C. Liquor Stores, February 2, 2025.Chris Helgren/Reuters
Canada unveiled the details of its first retaliatory barrage in an escalating trade war with the United States as U.S. President Donald Trump told Canadians they could avoid his punitive tariffs if they agree to be annexed as the 51st state.
Canadian officials said Sunday they are applying 25-per-cent retaliatory tariffs to 1,200 categories of American imports from chicken and orange juice to wine, refrigerators and motorcycles starting Tuesday.
The Department of Finance released a full list of products to be targeted in the first round of retaliation, one day after Mr. Trump launched a trade war against Canada.
Alleging Canada has failed to do enough to stop the southward flow of “illegal migrants” and fentanyl into the United States, Mr. Trump signed an executive order on Saturday that will impose 25-per-cent tariffs on Canadian goods and 10-per-cent levies on Canadian energy starting Tuesday. Canadian officials have repeatedly made the case in Washington that illegal migration and fentanyl smuggling from Canada into the United States represent a tiny fraction of the same illicit traffic from Mexico into American territory.
Mr. Trump’s trade shock has roiled markets, with the value of the Canadian dollar falling to 67.8 US cents on Sunday afternoon, its lowest level since 2003.
Prime Minister Justin Trudeau is scheduled to talk to Mr. Trump on Monday. It’s not known who requested the call. On Saturday, Mr. Trudeau told reporters he had not spoken to Mr. Trump since the President had taken office. “Since the inauguration, I’ve been reaching out to speak with Donald Trump. I hope to speak with him some time soon,” the Prime Minister said Saturday.
Ottawa’s target list lays out products that will be hit in the first round of retaliatory tariffs and covers $30-billion worth of American products.
Canadian companies are already feeling the pinch of Trump’s tariffs
On the weekend, a majority of provinces, including Ontario, Quebec, British Columbia, Manitoba, Nova Scotia, and Newfoundland and Labrador, announced they would remove U.S. products from provincial liquor stores
Canada is readying a second, broader round of retaliatory tariffs in 21 days that will affect another $125-billion in American imports.
Mr. Trump, who has warned he is prepared to raise tariffs even further, responded Sunday with a pointed new threat to Canadian sovereignty, decrying what he called subsidies to Canada through trade deficits.
“Why? There is no reason. We don’t need anything they have,” he wrote on Truth Social. “We have unlimited Energy, should make our own Cars, and have more Lumber than we can ever use.”
He also appeared to suggest that annexation is the best outcome for Canadians.
“Without this massive subsidy, Canada ceases to exist as a viable Country. Harsh but true!” he wrote. “Therefore, Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada – AND NO TARIFFS!”
Premiers respond to Trump’s tariffs with bans on U.S. booze sales, calls to buy Canadian
U.S. border agents seized 19.5 kilograms of fentanyl on the Canadian border in 2024, compared with nearly 10 tonnes of fentanyl last year on the southwest border. The U.S. Border Patrol order made more than 23,000 arrests of people trying to enter the U.S. from Canada in the most recent fiscal year, a small share of the 1.5 million arrests made altogether, most of them along the country’s southern border.
According to numbers from U.S. Customs and Border Protection, in the past fiscal year, U.S. border-patrol officers stopped people 23,721 times trying to cross illegally from Canada, more than double the 10,021 the year before. But it pales in comparison with the Mexican border, where officers stopped people more than 1.5 million times in the past fiscal year.According to U.S. government figures, border guards intercepted 19.5 kilograms of fentanyl along the Canadian border last year, which is 0.2 per cent of the nearly 11 tonnes intercepted in the United States.
The first-round tariffs that take effect Tuesday will increase prices of many consumer goods for Canadians. The range of affected products is extensive, including tobacco, mattresses, guns, drones, water heaters, hair dryers, vacuum cleaners as well as military gear such as bombs, grenades, torpedoes and missiles.
Some of Canada’s tariff targets were chosen to put economic pressure on U.S. states where key American lawmakers who form the Republican Party leadership reside, federal officials told reporters in a background briefing on Sunday.
This includes orange juice, fruits and vegetables from Florida, home to Republicans including Mr. Trump, products from South Carolina and Ohio, as well as motorcycles from Pennsylvania.
The first round of countertariffs was selected to cause the least economic damage to Canadians because the products affected are easily substitutable. Canada’s second round of retaliatory tariffs will be more painful and will include American goods such as passenger vehicles, trucks and buses, steel and aluminum products, aerospace products, beef and pork.
Government officials declined to provide economic estimates of the impact of the American tariffs and Canadian retaliatory tariffs, saying it was too early for them to forecast. The Canadian Chamber of Commerce’s Business Data Lab recently estimated that if Mr. Trump proceeded with his pledged tariffs and Canada countered with retaliatory tariffs, Canada’s annual economic output, or gross domestic product, would shrink by 2.6 per cent or $78-billion, costing Canadians approximately $1,900 per person annually.
Ottawa has promised to use collected revenue to help support workers and companies affected by the trade war. This could amount to tens of billions of dollars on an annual basis – with one caveat.
From blueberries to crankshafts, here’s how tariffs could hit Canada in unexpected ways
Canada’s initial round of tariffs on $30-billion of U.S. imports would collect $7.5-billion if the levies remained in place for a year and Canadian consumption behaviour did not change. But if Canadians stop consuming American wine, for instance, or other products, collective tariff revenue would decline.
The second round of tariffs planned by Canada, on $125-billion of American goods, would collect an additional $31.3-billion if they were to remain in place for a year. But again, changing consumer behaviour could mean fewer U.S. imports and less revenue.
Even as it readies retaliatory tariffs, Ottawa signalled it will grant exemptions to levies in exceptional circumstances for importing companies that can prove they can’t find substitute inputs, or in cases where this could have severe economic impact.
The executive order Mr. Trump signed Saturday imposing tariffs includes a retaliatory clause that says the U.S. “may increase or expand in scope the duties” if Canada levies import duties or similar measures against U.S. goods.
A statement from the White House Sunday outlined a number of ways in which “tariffs work.” It pointed to comments from Kirsten Hillman, Canada’s ambassador in Washington, who told the Associated Press in mid-January that Ottawa could purchase more defence-related goods from the U.S.
The statement also suggested that Canada spends too little on defence, and that the U.S. carries too much of the financial burden for the North American Aerospace Defence Command.
Canada will retaliate against President Donald Trump's new tariffs with 25% levies on a raft of U.S. imports, Prime Minister Justin Trudeau said on Feb. 1, warning Americans that Trump's actions would have real consequences for them.
Reuters
Mr. Trump has enjoyed plaudits from supporters for taking a hard line on friends and foes alike. He has promised to blunt the inflationary effect of his tariffs on the U.S. with cuts to taxes and regulatory burdens, while boosting the output of American manufacturing and energy to make up for imported goods.
Senior Republicans have provided deeply conflicting signals on how bitterly Washington intends to fight the trade war.
U.S. Secretary of State Marco Rubio, for example, has never raised Mr. Trump’s proposal for Canada to join the United States during any conversations with Foreign Affairs Minister Mélanie Joly, a government source said Sunday.
The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
South Carolina Senator Lindsey Graham, meanwhile, struck a far more conciliatory tone on Sunday.
“To our friends in Canada, I really appreciate what you’re doing on the northern border,” he told Fox News. He reprised a sentiment expressed last week by Howard Lutnick, Mr. Trump’s nominated commerce secretary, that the tariffs are a tool to prompt action.
They are “designed to bring about change,” Mr. Graham said. “And if the change comes, I think the tariffs probably go away.”
Major trade groups, however, have begun to sound the alarm on the negative effects tariffs would have on the U.S.
“Free and fair trade across our borders is critical for delivering affordable, reliable energy to U.S. consumers,” Mike Sommers, the president and chief executive of the American Petroleum Institute, said in a statement.
Suzanne Clark, who leads the U.S. Chamber of Commerce, warned in a statement that “blanket tariffs would worsen the cost-of-living crisis, forcing Americans to pay even more for daily essentials.”
Peter Eisner, the co-author of High Crimes: The Corruption, Impunity, and Impeachment of Donald Trump, said Mr. Trump’s actions defied logic.
“He’s doing it because he can do it. Is there any reason to be attacking the United States’ closest ally and neighbour? No,” he said.
Mr. Trump, he added, “is a bully and he wants submission. So, does it weaken Canada? It could. Does it weaken Mexico? It could. He wants everybody else weaker than him. He needs that.”