Despite weeks of cross-border meetings, the creation of expert councils, and the swift implementation of a $1.3-billion Canadian border security plan, U.S. President Donald Trump made good on his punishing tariff threats on Saturday, ushering in a new — and uncertain — chapter in Canada’s relationship with its largest trading partner.
Trump formally signed an executive order Saturday afternoon imposing 25 per cent tariffs on almost all Canadian goods and a 10 per cent tariff on Canadian energy products, firing the first official shots in a trade war that experts say could devastate economies on both sides of the border.
The measures, set to take effect on Tuesday, come after weeks of intense efforts by Canada to prevent Trump’s threat from being implemented.
Trump framed the tariffs as a response to a “national emergency” that warranted the sanctions being imposed under the U.S. International Emergency Economic Powers Act.
“Gang members, smugglers, human traffickers, and illicit drugs of all kinds have poured across our borders and into our communities. Canada has played a central role in these challenges, including by failing to devote sufficient attention and resources or meaningfully co-ordinate with United States law enforcement partners to effectively stem the tide of illicit drugs,” the order read.
The Trump administration, which also imposed stiff tariffs on Mexico and China, noted that while “the challenges at our southern border are foremost in the public consciousness,” the “northern border is not exempt from these issues.”
The order cited “unvetted illegal migration” across the Canadian border into the U.S., and “a growing presence of Mexican cartels operating fentanyl and nitazene synthesis labs in Canada.”
Trump said in the order that Canada’s failure to adequately address the issues of irregular migration activity and the flow of drugs like fentanyl across the border constituted “an unusual and extraordinary threat … to the national security and foreign policy of the United States.”
The order also warned that any retaliatory efforts planned by Canada against the U.S. “through import duties on United States exports to Canada or similar measures” could result in Trump firing back with a stronger response.
In a fact sheet also issued Saturday, the White House minimized the fallout of a trade dispute for the U.S. economy, saying that “while trade accounts for 67 per cent of Canada’s GDP, 73 per cent of Mexico’s GDP, and 37 per cent of China’s GDP, it accounts for only 24 per cent of U.S. GDP.”
It also said that “in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.”
The document pumped up the use of tariffs as a formidable tool.
“Tariffs are a powerful, proven source of leverage for protecting the national interest. President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first,” the fact sheet said.
Prime Minister Justin Trudeau and his cabinet were to elaborate on Canada’s plan Saturday night.
In a statement issued Saturday evening, Ontario Progressive Conservative Leader Doug Ford said he was “extremely disappointed” by Trump’s decision to “walk away from a trading relationship that, for decades, has made life better for millions,” and stressed that impacts would be felt on both sides of the border.
“I wish we weren’t here. I wish Ontario and Canada were working together with our American friends and allies to make our two countries the richest, most successful, safest, most secure on the planet,” said Ford’s statement, sent by a spokesperson to the Star.
“Instead, President Trump has chosen to move forward with tariffs that will only hurt America and make Americans poorer.”
Ford said the coming weeks could be “incredibly difficult” for Ontario, estimating the tariffs could put nearly 500,000 jobs across the province at risk and urging the federal government to come back with a “forceful” response that matches the U.S. tariffs “dollar for dollar.”
Reacting to the news, Flavio Volpe, president of the Automotive Parts Manufacturing Association, said the only surprise is the timing, and said U.S. tariffs at this level “will simply shut down — within a week — automotive production across North America like the pandemic did.”
“It’s a simple principle. We’re in a just-in-time (delivery) business that carries no more than 24 hours inventory. And you can’t build a car or run a (production) line without all of the parts,” he said in an interview.
“And it is an immediate domino effect across North America.”
The head of the country’s biggest private sector union said the tariffs would plunge the Canadian economy into a recession.
“Canadians need to understand that this has changed everything for us as a country,” said Unifor national president Lana Payne, adding that Trump has declared economic war.
“This is an existential threat to our entire economy,” said Payne.
Payne, whose union includes 40,000 autoworkers across the country, said Trump’s tariffs will hurt workers and consumers on both sides of the border, and could see the entire auto manufacturing industry shut down within a week.
It’s something, she said, that demands a firm response from Canada.
“We have to put everything else on the table for consideration,” said Payne, adding that in addition to retaliatory tariffs, the Canadian government should be considering export controls in key sectors such as critical minerals. She also suggested that Canada should bar U.S. companies from bidding on government contracts.
The tariffs could shrink the size of the Canadian economy by tens of billions of dollars, cost “hundreds of thousands” of jobs, push into a recession and crush the loonie, said Pedro Antunes, chief economist at the Conference Board of Canada.
“It’s absolute madness,” said Antunes. “We could be looking at a 60-cent dollar within a week.”
The CEO of the Ontario Chamber of Commerce said the tariffs will hurt businesses and consumers on both sides of the border.
“It makes no economic sense,” said Daniel Tisch. “Trump isn’t putting America first. He’s more likely to ensure all of North America finishes last.”
Canada has been steeling itself against the prospect of American tariffs since Trump, looking toward a second term in office, threatened last year to impose a 25 per cent surcharge on imports from Canada and Mexico. Most trade experts and business groups had considered 25 per cent tariffs on all imports to be unlikely, and were instead expecting more targeted tariffs, at least initially. Trump had also signalled that he would hold off on slapping a 10 per cent tariff on oil and gas until Feb. 18, but walked away from that commitment on Saturday.
The U.S. president has framed the surcharges as a way to force a crackdown against people illegally crossing its borders, as well as to force stronger action to prevent the potent drug fentanyl from being smuggled between North American countries.
A reality check from the Star has found that while fentanyl seizures in the U.S. northern border region increased over the past year, they only represent a fraction of the total that U.S. authorities have intercepted over the last two years. Additionally, while the number of people U.S. border agents apprehended in the northern border region under the “Title 8” authority — detaining someone not allowed in the U.S. — rose to 23,721 during the 2024 fiscal year, apprehensions at the southern border exceeded 1.5 million.
The Trudeau government nevertheless in December launched a $1.3-billion border security plan in response to Trump’s early threats, aimed at disrupting the fentanyl trade, implementing 24/7 surveillance at ports of entry, improving information sharing between Canadian and U.S. officials, and reducing “unnecessary” border crossings.
The Canadian government has also strongly signalled its willingness to retaliate against American tariffs, and suggested it has multiple options available to hit back.
In 2023, the most recent year for which annual data is available, Canadian exports to the U.S. totalled $594.5 billion (Canadian), according to official statistics from the federal ministry for Innovation, Science and Economic Development. In the top spot at $130.3 billion was crude oil, with other petroleum products estimated at a value of $36.6 billion. The American government’s trade figures show the U.S. imports hundreds of billions of dollars of products from Canada. Through the first 11 months of 2024, the U.S. brought in $377.2 billion (U.S.) in Canadian imports, or $542.5 billion in Canadian dollars.
The second-biggest player in this trade relationship is the automotive industry. Canada exported roughly $75 billion in cars, trucks and automotive parts to the U.S. in 2023, with industry insiders noting that some materials will cross the Canada-U.S. border several times while they’re crafted from raw material into a finished vehicle product.
This is a developing story
With files from Star staff, The Canadian Press and the Associated Press
