President Donald Trump of the United States remained loyal to his threat.
On Tuesday, the Trump administration unlocked 25% blanket tariffs on Canadian imports, reaching 10%, excluding energy.
Trump also slapped Mexico’s 25% tariffs and doubled China’s tariffs to 20%.
Royal Bank of Canada’s economists Francis Donald and Cynthia Reach have called this the biggest trade shock to Canada in nearly 100 years.
Vina Najibla, vice president of research and strategy at the Asia-Pacific Foundation in Canada, called tariffs the “existential battle.”
Whatever the impact, all economists agree that a trade war between the United States and Canada has begun.
Canada has announced 25% tariffs on US imports worth C$30 billion ($21 billion) and said it will target an additional $125 billion ($87 billion) of goods over 21 days if necessary.
Mexico has pledged to retaliate, but has thwarted all measures until Sunday.
China announced the imposition of 10-15% tariffs on certain US imports starting March 10, as well as a series of new export restrictions for designated US entities.
He also filed a complaint with the World Trade Organization regarding its actions on Tuesday.
Rachel Ziemba, a part-time senior fellow at the new American Security Center, said the length of the tariff war remains “in the US courts.”
But even if the blanket tariffs are cancelled, more customized tariffs are likely to last, and as a result, they are likely to cause inflation that will hurt the economies of all countries involved, Ziemba said.
“The economic impact will be important in all aspects as prices and inflation rise and businesses struggle to plan with these tariffs as well as other tariffs coming,” Ziemba told Al Jazeera, referring to Trump’s promise to impose mutual tariffs on all countries that apply taxes to US products.
“It’s very difficult to say where this is heading,” Brett House, a professor at Columbia Business School, told Al Jazeera.
“Before we see the rollback, there will be more tariffs in more countries,” House said, adding, “The Trump White House moves on a whim and changes its mind.”
The House said negotiations are possible, but the reason for slap tariffs in Canada is forcing undocumented immigrants and fentanyl to force the flow to the US.
Last month, Canada’s CBC News reported that new data from the Canadian Border Services Agency (CBSA) showed an increasing influx of illegal US drugs and guns over the past few years. For example, drug transport spiked from 3.8 million grams (600 koku) to 8.3 million grams (1,307 koku) in 2024.
“Deep Shift”
So, everything is negotiable, but Trump is usually in response to flattering or force, and Canada is already trying to flatter.
“The Prime Minister’s Office is currently being forced to shift,” House said.
Apart from the tariffs announced so far, Canada is also considering imposing tariffs on electricity exports to the United States.
More importantly, this situation has made the question sharper focus, which has collected steam in the face of threats from Ottawa’s closest allies. What is the future of relationships between Canada and the US?
Canada’s estimates suggest that Trump’s tariffs could cost as much as 1.5 million people and could put the economy in a recession.
Canadian Prime Minister Justin Trudeau said on Tuesday that Trump is “planning to cause a complete collapse of the Canadian economy.
“This isn’t just tariffs. Najibla, Vice President of Research and Strategy at the Asia-Pacific Foundation in Canada, told Al Jazeera, that the most unsettling and profound change we are witnessing right now is the relationship between Canada and the US.”
“This is an existential battle and requires leadership from all states and all parties because no one knows what tomorrow holds.”
Nadjibulla said it is unclear whether current tensions are limited to trade or whether they will bleeding in other areas such as foreign policy and defense and security arrangements.
Even if there is a departure from escalation between the two countries, she added, “there is a “complete change in paradigm” in the way we see the relationship between the United States and its traditional allies now.
“It’s clear that we need to create our own national resilience, and we need to be able to trade and work with others around the world,” she said. “It’s a wake-up call for Canada.”
But it’s also a Mexico wake-up call, as some Canadian Prime Ministers suggest that Canada is taking on its own trade agreement with the US to replace the US-Canada agreement.
“There’s strength in numbers,” the House said. “The strategy of a bully like the US president is to split and ensure that his counterparts are negotiating individually.”
The House warned that Ottawa’s relationship with Mexico could be undermined by Canada’s proposal to exclude Mexico from future trade agreements.
On Tuesday, U.S. Commerce Secretary Howard Lutnick told Fox Business that Trump will reach the middle ground between Canada and Mexico on tariffs, and that its effects are expected to be announced on Wednesday.
Whatever the compromise, it will not completely repair the damage caused to relationships between North American trading partners, Ziemba said, particularly as other tariffs in certain sectors are expected in the future.
It said “the costs of a trade war are high and a ceasefire is possible,” Ziemba said.
Until then, it’s elbows up, as they say when a fight is about to break out during Isca hockey in Canada.
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