WASHINGTON – Canadians will be waking up to a new and uncertain reality after U.S. President Donald Trump’s deadline for economy-wide tariffs passed with no relent overnight, triggering a continental trade war.
The president’s executive order hitting Canada and Mexico with 25 per cent across-the-board tariffs, with a lower 10 per cent levy on Canadian energy, took effect at 12:01 a.m. ET.
“Tariffs, 25 per cent on Canada and 25 per cent on Mexico, and that’ll start,” Trump said Monday at the White House, sparking an immediate response from Wall Street. “They’re going to have to have a tariff.”
In a statement Monday night, Prime Minister Justin Trudeau said Trump’s tariffs are “unjustified” and Canada will retaliate with counter-tariffs and other measures.
Canada’s response is to start with tariffs on $30 billion worth of goods immediately and tariffs on the remaining $125 billion worth of American products 21 days later.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau said. “While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal.”
Trudeau is set to hold a press conference in Ottawa Tuesday morning with Finance Minister Dominic LeBlanc, Foreign Affairs Minister Mélanie Joly and Public Safety Minister David McGuinty.
The S&P 500 dropped two per cent in Monday afternoon trading. The Dow Jones Industrial Average dropped 1.5 per cent and the Nasdaq composite slumped 2.6 per cent.
Ontario Premier Doug Ford warned Americans that Canada would have a strong response and suggested he could shut down the movement of critical minerals and energy into the United States. He said Trump needs to pull back for the sake of Americans and Canadians.
“The market is going to go downhill faster than the American bobsled team,” Ford told NBC News Monday. “It’s going to be an absolute disaster.”
Ford said Trump is leaving Canada no choice.
“When one person attacks our country unprovoked, then we are going to respond,” he said.
Canadian officials and premiers made a month-long diplomatic push in Washington after Trump originally signed the executive order, which tied the duties to the illegal flow of people and drugs across the northern border.
Trump’s team has been supportive of Canada’s border security plan but it’s not clear that anything could have dissuaded the president from imposing tariffs.
U.S. Customs and Border Patrol data shows the number of people and drugs crossing illegally into the United States from Canada is minuscule compared to the volume coming across the southern border. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.
Trump previously said the delay would allow time for an “economic” deal and on Monday suggested Canada and Mexico should “build their car plants, frankly, and other things in the United States, in which case you have no tariffs.”
Tariffs have been “used as a sword to dangle over our heads,” said Dan Kelly, president of the Canadian Federation of Independent Business. The threat has taken a toll on investor confidence, he said.
Canadian and American union and industry groups condemned the tariffs. The International Association of Machinists and Aerospace Workers, which represents about 600,000 workers in Canada and the United States, urged Trump “to immediately reconsider these tariffs and pursue trade policies that strengthen, rather than weaken, the economic relationship” between the countries.
Many Canadian officials have said that Trump’s ongoing tariff threats are tied to an upcoming mandatory review of the Canada-U.S.-Mexico Agreement. The continental trade pact was negotiated under the first Trump administration to replace the North American Free Trade Agreement.
Mike Holden, chief economist at the Business Council of Alberta, said Trump tends not to care about what’s popular — but a big economic hit to the U.S. could sway him.
“To the extent that we see large drops in the stock market, if we start to see inflation in the U.S. really picking up, if we start to see the economy slowing and job losses in the U.S., those are things that I think he does pay attention to,” Holden said.
In addition to the tariffs on Canada and Mexico, the 10 per cent tariff that Trump placed on Chinese imports in February doubled to 20 per cent overnight.
China then announced it would impose additional tariffs of up to 15 per cent on imports of key U.S. farm products, including chicken, pork, soy and beef.
A report issued by the Peterson Institute for International Economics last month said Trump’s tariffs on Canada, Mexico and China would cost the typical U.S. household more than US$1,200 a year.
Democratic lawmakers in the U.S. have been quick to criticize the tariffs, but even some Republican senators raised alarms.
Sen. Susan Collins, a Republican from Maine, said she’s “very concerned” about the tariffs going into effect because of her state’s proximity to Canada.
“Maine and Canada’s economy are integrated,” Collins said, explaining that much of the state’s lobsters and blueberries are processed in Canada and then sent back to the U.S.
Trump returned to the White House in January with a tariff agenda bent on upending global trade. He ordered 25 per cent tariffs on all steel and aluminum imports into the United States on March 12, which the White House has confirmed would stack on top of the other duties imposed on Canada.
Trump signed an executive order to implement “reciprocal tariffs” starting April 2. He floated the idea of imposing duties on automobiles and signed executive orders to investigate levies on copper and lumber. Trump added agricultural products to his growing list of tariff targets on Monday.
— With files from Lauren Krugel in Calgary and The Associated Press
This report by The Canadian Press was first published March 4, 2025.
