U.S. President Donald Trump has announced that his long-threatened trade war is set to begin, with a 25% tariff on Canadian goods taking effect just after midnight. Speaking at the White House, Trump stated that the U.S. has been “a laughingstock for years” and emphasized the need for trade action against Canada and Mexico, claiming there’s no room left for negotiation.
Despite data contradicting his claims, Trump accused Canada of allowing fentanyl to flood into the U.S. He confirmed that tariffs of 25% on both Canadian and Mexican goods will commence, leaving no room for Canada to negotiate a delay.
In response, Canadian Foreign Affairs Minister Mélanie Joly announced that Canada is prepared with a package of retaliatory measures, including 155billionworthoftariffs,withaninitial30 billion tranche already announced. Joly emphasized the seriousness of the situation, noting the potential threat to thousands of Canadian jobs and the economy.
Economists warn that such a significant tariff could lead to a recession. Bank of Canada Governor Tiff Macklem highlighted the severe economic consequences of a prolonged trade conflict, warning that unlike the pandemic-induced recession, a trade war could result in a structural economic change without a quick recovery.
The tariffs are expected to make Canadian goods less competitive, as American importers will face a 25% levy, potentially increasing prices for U.S. consumers on a range of products, from car parts to pharmaceuticals.
