PM Trudeau vows to retaliate with countertariffs as Trump declares trade war
Prime Minister Justin Trudeau vowed economic retaliation against the U.S., after President Donald Trump said on Monday that he was standing by his decision to impose 25-per-cent tariffs on Canadian and Mexican goods starting Tuesday.
Speaking to reporters at the White House, Mr. Trump said there is “no room left” for either country to make a deal that would avoid the punishing levies.
The announcement, after months of economic threats from Mr. Trump, prompted a response from Mr. Trudeau hours later. He said in a statement Monday evening that Canada would retaliate with its own tariffs on billions of dollars in American goods, setting the stage for a major trade war between this country and its largest trading partner.
The retaliatory tariffs, Mr. Trudeau said, would take effect at 12:01 a.m. ET on Tuesday morning if the U.S. tariffs were in effect. He defended Canada’s actions on the border and its work to stem the flow of fentanyl into the U.S.
“Let me be unequivocally clear – there is no justification for these actions,” he said, referring to the U.S. tariffs.
Mr. Trudeau is expected to address Canadians Tuesday morning to detail the retaliatory measures. His statement says they will initially apply to $30-billion in U.S. goods, rising to $155-billion in 21 days.
Mr. Trump made his comments during an announcement by Taiwan Semiconductor Manufacturing Company, which is investing US$100-billion in the U.S. to build more chipmaking factories there.
He alleged that Canada is partly responsible for “vast amounts of fentanyl” that “have poured into our country,” despite data showing a tiny fraction of the drug has been smuggled into the United States from Canada.
“Very importantly, tomorrow, tariffs, 25 per cent on Canada and 25 per cent on Mexico, and that will start,” Mr. Trump said.
Asked whether there’s anything Canada or Mexico can do to try to avert the tariffs, Mr. Trump said no. “They’re all set, they go into effect tomorrow.”
He said auto companies and others will need to follow TSMC’s lead if they want to avoid punitive levies: “What they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”
U.S. stock markets sold off sharply on Monday after the President’s remarks. The S&P 500 Index ended down 1.8 per cent while the Nasdaq Composite was down 2.6 per cent.
The tariffs on Canada will be 10 per cent for energy and critical minerals.
Mr. Trump doesn’t need to issue a new executive order to implement the 25-per-cent tariffs against Canada. His Feb. 1 order enacting the tariffs was modified by a Feb. 3 order that changed the date of implementation to 12:01 a.m. ET March 4 after Canada and Mexico promised more measures to combat the illicit movement of people and drugs into the United States.
Mr. Trump also talked of another wave of levies coming April 2: reciprocal tariffs that are intended to punish other countries that impose taxes, levies or other barriers on U.S. companies.
On Monday, Mr. Trump offered little detail on the role he alleges Canada plays in fentanyl shipments to the United States except to say it comes “from Mexico, and as you know, also from China, where it goes to Mexico and goes to Canada.”
Citing U.S. Customs and Border Protection data, the White House has asserted that 43 pounds of fentanyl was intercepted at the border last fiscal year, marking a “massive 2,050 per cent increase” compared with the year prior, when two pounds of the deadly synthetic drug was seized.
However, a Globe and Mail investigation, published last week, determined that the northern-border data set doesn’t reveal anything about the origin of the drugs and, in fact, includes fentanyl that came from Mexico. The fentanyl moving from Canada into the United States is a tiny fraction of the thousands of pounds of the illicit drug trafficked into American territory each year.
Mr. Trump also confirmed he will raise tariffs on China to 20 per cent from 10 per cent.
Foreign Affairs Minister Mélanie Joly, reacting to Mr. Trump’s remarks before Mr. Trudeau released his statement on Monday, called 25-per-cent tariffs an “existential threat” to Canada.
“Should the U.S. decide to launch their trade war, we will be ready,” Ms. Joly said.
Defence Minister Bill Blair said Canadian and U.S. officials were still talking as of Monday afternoon. “The decision that has been announced I think is deeply regrettable and will have a very significant impact not just on Canadians but also on Americans,” he told reporters.
Immigration Minister Marc Miller warned that one million Canadian jobs are at risk if the U.S. proceeds with its full tariff plan. He told reporters in Montreal that Canada is dealing with “an administration that uses uncertainty as a bargaining tool.”
He said it will be difficult to diversify trade away from the United States. “We can’t replace an economy that is responsible for 80 per cent of our trade overnight and it’s going to hurt.”
Earlier this year, Canada outlined several rounds of planned retaliation, including possible levies on U.S.-bound exports, such as critical minerals and energy, as well as changes to government procurement.
Ms. Joly noted that Mr. Trump has not explained how this 25-per-cent tariff threat is justified. She said his executive order talks about a “national security crisis” but, Ms. Joly said, “We know that’s not the case at the border.” She said Canada has produced a good plan to stop clandestine migration and target illegal production and distribution of fentanyl.
New York congressman Tim Kennedy, a Democrat, said Monday the tariffs on Canada would be “disastrous” and warned they would hurt Americans.
“This consumer tax, set to go into effect at midnight, will decimate our region’s economy, cost jobs, and make life more expensive for hard working families,” Mr. Kennedy said in a statement shortly after Mr. Trump declared the tariffs will go into effect Tuesday.
“Canada is our neighbor, largest trading partner, and closest ally. During the pause on implementation, even the mere threat of tariffs has already had a chilling effect on the Western New York economy, slowing investments and creating uncertainty. I continue to demand an immediate end to this trade war with Canada.”
Mr. Trump, who in January indicated that he planned to use “economic force” to coerce Canadians into agreeing to be annexed by the U.S. as the “51st state,” is continuing to pile new tariff threats on Canada – levies that by all accounts would stack or apply on top of each other.
He has announced 25-per-cent tariffs on global imports of steel and aluminum into the U.S., including from Canada, starting March 12. On Saturday, the Trump administration ordered a new trade investigation that could heap more tariffs on imported lumber, adding to existing duties on Canadian softwood lumber.
Speaking before Mr. Trump’s declaration Tuesday, U.S. Commerce secretary Howard Lutnick told CNN Mr. Trump wants auto jobs to come back to the United States, and the issue will be dealt with at the beginning of April.
“He wants to reinvigorate Michigan and Ohio, and that’s the plan of his tariff policy,” Mr. Lutnick said.
Beijing “will take all necessary measures to firmly safeguard its legitimate interests,” Foreign Ministry spokesman Lin Jian said on Monday, ahead of Mr. Trump’s announcement. In a report, the Chinese state-run Global Times cited unnamed sources predicting countermeasures would most likely include both tariffs and non-tariff measures targeting U.S. agricultural and food products.
With a report from James Griffiths
This article was first reported by The Globe and Mail
