Trudeau says Canada will retaliate for Trump’s tariffs with 25 per cent levies on billions of U.S. goods

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Canada and its biggest trading partner are headed for a costly and damaging trade war after Prime Minister Justin Trudeau unveiled a retaliation plan against U.S. President Donald Trump’s executive order that, starting Tuesday, will impose 25-per-cent tariffs on Canadian goods and 10-per-cent levies on Canadian energy.

Mr. Trudeau said Saturday that in response Canada will impose 25-per-cent tariffs on $155-billion worth of American imports, starting on Tuesday with $30-billion in goods and adding $125-billion in goods 21 days later. That is the same day U.S. tariffs hit Canadian products.

Further, he said Canada is considering “non-tariff measures” that could affect exports to the United States including critical minerals, energy and government procurement.

“We will stand strong for Canada,” Mr. Trudeau told reporters in Ottawa, adding later: “The coming weeks will be difficult for Canadians and they will be difficult for Americans.”

He acknowledged he has not spoken with Mr. Trump since the American President took office.

“Since the inauguration, I’ve been reaching out to speak with Donald Trump. I hope to speak with him sometime soon.”

The executive order signed by Mr. Trump threatens further escalation if Canada retaliates, setting the stage for an economically dangerous trade war between two of the wealthiest countries on earth, while striking away the free movement of goods that has for decades underpinned commerce in North America, and upon which millions of jobs depend.

Mr. Trump’s orders also place a 25-per-cent levy on goods from Mexico. Chinese imports will face an additional 10-per-cent tariff.

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In a retaliatory clause included on executive orders against all three countries, the U.S. says it “may increase or expand in scope the duties” if levies or similar measures are enacted against American goods.

“We need to protect Americans, and it is my duty as President to ensure the safety of all,” Mr. Trump wrote on social media. “I made a promise on my Campaign to stop the flood of illegal aliens and drugs from pouring across our Borders, and Americans overwhelmingly voted in favor of it.”

The order faults Canada for having what it calls Mexican cartel-operated labs, and says that even if the amount of fentanyl crossing the U.S. northern border is comparatively small, it was enough to kill 9.5 million Americans last year.

It accuses Canada of playing a “central role” in the movement of narcotics and illegal migrants into the U.S., saying Canadian leadership has failed “to devote sufficient attention and resources or meaningfully coordinate with United States law enforcement partners to effectively stem the tide of illicit drugs.”

The tariffs will be removed, the order says, “upon the President’s determination of sufficient action to alleviate the crisis.”

Mexican President Claudia Sheinbaum said in a post on X on Saturday that her government is also proceeding with retaliatory measures including tariffs against the United States “in defence of Mexico’s interests.”

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She said Mexico has worked hard to combat the illegal fentanyl trade and said Mr. Trump has slandered Mexico by suggesting it’s allied with criminal organizations. “If such an alliance exists anywhere, it is in the U.S. gun shops that sell high-powered weapons to these criminal groups,” she said.

“If the U.S. government and its agencies wanted to address the serious consumption of fentanyl in their country, they could, for example, combat the sale of narcotics on the streets of their major cities, which they do not do, and the money laundering generated by this illegal activity that has done so much damage to their population,” she said.

Mr. Trudeau said in Canada’s retaliation plan, U.S. goods that will be targeted range from American beer, wine and bourbon to orange juice to household appliances, furniture, plastics and “much, much more.”

The Canadian government has acknowledged an export tax on energy and critical minerals is on the table but Mr. Trudeau declined to say if he would forgo measures affecting energy exports, as Alberta Premier Danielle Smith has urged.

He repeated his philosophy that in retaliatory measures “no one part of the country should be carrying a heavier burden than any other.”

The Prime Minister acknowledged Mr. Trump had threatened to hike tariffs on Canadian goods even more if Canada retaliates. He said he didn’t think Canada had a choice but to respond. “We’re certainly not looking to escalate, but we will stand up for Canada and Canadian jobs.”

He said Canada would rather work on improving a relationship “that has been the envy of the world” which included Canadians fighting side by side with Americans in numerous conflicts.

“From beaches of Normandy to the mountains of the Korean Peninsula; from the fields of Flanders to the streets of Kandahar, we have fought and died alongside you.”

He called on Canadians to show solidarity and “stand up for Canada” by boycotting American products and visits to the United States.

“It might mean opting for Canadian rye over Kentucky bourbon, forgoing Florida orange juice altogether. It might mean changing your summer vacation plans to stay here in Canada,” Mr. Trudeau said.

He questioned why Mr. Trump would target Canada with such drastic measures instead of looking to “more challenging parts” of the world.

“I don’t think there is a lot of Americans who wake up in the morning saying: ‘Damn Canada. We should really go after Canada’.”

Free trade in North America has endured in some fashion for at least 60 years. Mr. Trump has sought to make that history a thing of the past.

The free movement of goods is now “certainly at a hiatus,” said Everett Eissenstat, a trade expert who was deputy director of the National Economic Council during Mr. Trump’s first administration.

He called it “a sea change in our relationship,” one tied not only to border concerns but also to Mr. Trump’s broader complaints about U.S. trade deficits. A White House fact sheet noted that the country’s US$1-trillion trade deficit is the world’s largest. It included a series of numbers that suggested Canada and Mexico have far more to lose: trade makes up just 24 per cent of U.S. GDP, compared to 67 per cent for Canada and 73 per cent for Mexico.

Some of Mr. Trump’s most loyal supporters on Saturday boasted about the tariffs and warned against reprisals. Mike Johnson, the Republican Speaker of the House of Representatives, offered a less strident message, suggesting there may be steps that Canada, China and Mexico can do to address the tariffs.

“These countries are now on notice to work quickly to stop the madness,” Mr. Johnson wrote on X.

Ian Bremmer, the president and founder of Eurasia Group, said the executive order “feels like a negotiating strategy.”

At the same time, he said, it “could easily spiral into hostilities. And that’s unprecedented in this relationship. The long-term damage is real.”

Canadian political and business leaders have vowed to push Mr. Trump to change course, promising retaliatory measures and lobbying allies in U.S. corporate offices and state capitals to help plead the case.

But the tariffs have thrust the continent into a deeply fraught moment, said Frank Giustra, the Canadian mining financier and philanthropist. He recalled the 1930 Smoot-Hawley Act, in which the U.S. imposed hefty tariffs on goods imported from numerous countries. Retaliatory tariffs, including from Canada, led to a plunge in global trade that worsened the effects of the Great Depression.

“When that happens, economies suffer. When economies suffer, you get populism. Totalitarian governments come in to try to remedy the problem. And everybody is looking expand their territory,” Mr. Giustra said.

“We’re living in a very fragile world at the moment.”

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Bruce Heyman, who was the U.S. ambassador to Canada under Barack Obama, called Saturday “perhaps the most difficult day in our shared history.”

Mr. Trump re-entered office with fresh determination to alter the economic trajectory of the U.S., blaming other countries for taking advantage of American goodwill to the detriment of its workers and companies.

Far more tariffs are coming, he said this week, with plans for new surcharges on the European Union as well as broad categories of products, including steel, aluminum, copper, microchips, pharmaceuticals and fossil fuels.

Mr. Trump has described such steps as necessary to restore American economic primacy, manufacturing prowess and wealth.

Conservative Leader Pierre Poilievre in a statement criticized what he called Mr. Trump’s “massive, unjust and unjustified tariffs” on “the United States’ closest neighbour, greatest ally and best friend.”

He urged the Liberal government on Saturday to recall Parliament to pass a “Canada First Plan” including “dollar-for-dollar” retaliatory tariffs carefully aimed at maximizing impact on American companies while minimizing impact on Canadian consumers.

Mr. Poilievre called on Ottawa to use the revenue from retaliatory tariffs to help affected workers and businesses. “Government should not keep a dime of the new revenue,” he said.

He also recommended a tax cut to bolster the economy, diversify Canada’s international trading partners and make it easier to build pipelines to export energy overseas.

Alberta Premier Danielle Smith, who has frequently clashed with Ottawa and other premiers about how Canada should respond, took credit for oil and gas being slapped with a lower tariff on Saturday, saying it was partly thanks her advocacy among U.S. officials.

The Premier said she was disappointed by the tariffs, stressing that they will hurt both Canadians and Americans. However, she stood firm in opposing any bans of Canadian exports or new levies on Canadian products headed for the United States.

International trade lawyer Lawrence Herman said Mr. Trump is pushing the boundaries of what is permitted under the International Emergency Economic Powers Act, the legislation he is using to impose tariffs without congressional approval.

“Trump is aggressively, perversely and patently stretching use executive powers under IEEPA, trying to cover his actions by claiming there’s some kind of national emergency,” Mr. Herman said. He predicted legal challenges of the president’s action, which also violates the United States-Mexico-Canada Agreement.

“He’s applying tariffs for all sorts of arguments that have nothing to do with any so-called national emergency as IEEPA requires,” Mr. Herman added. “The problem is that U.S. courts have tended to defer to executive action in international matters.”

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Over decades of free trade in North America, companies have built interwoven continental networks that process raw materials, manufacture vehicles and prepare food – all with little regard to borders that have posed minimal obstacles to the movement of minerals, parts and agricultural goods.

The sudden re-emergence of borders as a costly hurdle stands to deliver not merely consumer pain and inflationary escalation, but considerable industrial disruption.

The White House has argued that it is taking other measures, including tax cuts and regulatory reductions, that will offset inflationary pressures from tariffs.

Mr. Trump defended the tariffs in a social media post on Sunday, though he acknowledged that the policy could hurt Americans.

“Will there be some pain? Yes, maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid,” Mr. Trump wrote.

With a report from Jeffrey Jones