Key Points
- Canada imposes retaliatory 25 per cent tariffs on US goods.
- Canadian Prime Minister Justin Trudeau described Donald Trump's actions as the beginning of a "trade war".
- Donald Trump has used the domestic fentanyl crisis to justify his tariff actions.
Canadian Prime Minister Justin Trudeau has accused United States President Donald Trump of trying to damage Canada's economy with sweeping tariffs, calling it a "very dumb thing to do" and a potential step toward annexation.
Since taking office, Trump has imposed 25 per cent tariffs on products entering the US from neighbouring countries such as Mexico and Canada, while also increasing a levy on goods coming from China.
On Tuesday, Trudeau announced retaliatory 25 per cent tariffs on products like wine, peanut butter, orange juice, spirits, beer, coffee, and appliances, totalling tens of billions of dollars.
The move followed China's recent action, announcing 10-15 per cent tariffs on US goods from mid-March and pledging to fight a trade war with the US "to the bitter end" if necessary.
Mexican President Claudia Sheinbaum has also vowed to announce retaliatory measures against the US in the coming days.
Speaking to reporters on Tuesday, Trudeau described Trump's actions as the beginning of a "trade war that will first and foremost harm American families" and promised to fight back against the measures.
"What he [Trump] wants to see is a total collapse of the Canadian economy because that will make it easier to annex us. That is never going to happen. We will never be the 51st state," he said.
In a post on Truth Social, Trump warned Canada's"retaliatory tariff[s] on the US" would prompt "reciprocal tariffs [to] immediately increase by a like amount".
Trump has used the domestic fentanyl crisis to justify his tariff actions against the US' three largest trading partners, accusing them of not doing enough to stem the flow of the addictive drug into his country.
However, Trudeau disputed the allegation on Tuesday, saying less than 1 per cent of fentanyl intercepted at the US border comes from Canada.
Tariffs are taxes on imports aimed at shielding local businesses from cheaper foreign competition and supporting domestic jobs, but economists argue they also increase consumer prices.
For decades, Canada and Mexico have faced zero tariffs from the US as a result of the now-defunct North American Free Trade Agreement, which Trump dismantled in his first term in office.
Trade between the US and China has steadily grown since the late 1970s, but the two countries engaged in a years-long trade war during Trump's first presidency, imposing hundreds of billions of dollars in tariffs on each other's goods.
