Trudeau calls Trump tariffs ‘dumb thing to do’ as Canada fires back
“We don’t want this.” Prime Minister Justin Trudeau placed blame for a trade war between the U.S. and Canada squarely on the Trump administration.
- President Trump imposed tariffs on imports from Canada, Mexico, and China as part of his “America First” agenda.
- Canada, Mexico, and China have retaliated with their own tariffs on U.S. goods.
- Economists warn that the tariffs could slow down the U.S. economy and lead to job losses.
President Donald Trump sparked a trade war just after midnight on Tuesday with three of the country’s biggest trading partners – including Canada – that could have long-lasting effects on Americans, according to experts.
After years of a free-trade agreement, Trump imposed 25% tariffs on imports from Canada and Mexico while doubling the duties on some Chinese goods to 20% as part of his “America First” agenda.
“It’s a very powerful weapon that politicians haven’t used because they were either dishonest, stupid or paid off in some other form,” Trump said in the White House’s Roosevelt Room on Monday.
The action immediately shook global markets, plummeted stocks and will likely raise prices on everyday products – from gas to produce – for consumers. Canada, Mexico and China quickly retaliated, with Canadian Prime Minister Justin Trudeau saying Ottawa is setting 25% tariffs on $20.7 billion worth of U.S. imports, from orange juice to cosmetics.
If Trump’s duties remain in place in 21 days, Canada will add tariffs on the remaining $86.2 billion worth of U.S. imports, including vehicles, produce and meat.
Tariffs, or taxes imposed on foreign imports, are usually passed down to the consumer.
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they violate the U.S.-Mexico-Canada free trade agreement signed by Trump in his first term.
Here’s why Trump placed tariffs on Canada.
Why is Trump putting tariffs on Canada?
The Trump Administration justifies the tariffs as “leverage” to address what it calls a national emergency at the border and prompt more goods to be made within the U.S.
Citing the International Emergency Economic Powers Act (IEEPA), the White House says the measures will curb illegal immigration and combat the trafficking of drugs like fentanyl.
“President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country,” the White House said in a fact sheet from Feb. 1.
It states a “growing footprint” of narcotics in Canada, including nitazene synthesis labs that create synthetic opioids and greater production of fentanyl.
“This is a bargaining tool,” said Martin Eichenbaum, Charles Moskos Professor of Economics at Northwestern University. “You have to get your act together … or I’m going to punish you; it’s do this or else.”
Last month, Trump paused his threat of tariffs for 30 days following a call he had with Trudeau in which Canada said it is spending $1.3 billion to reinforce its borders with around 10,000 “frontline personnel” and will hire a “Fentanyl Czar” along with creating an intelligence program targeting organized crime and drugs.
What do the tariffs mean for Americans?
Experts believe the tariffs will cause higher prices and more inflation, contradicting Trump’s commitment to reduce living expenses for Americans.
Some goods will experience price increases sooner than others, but Americans can expect noticeable changes within a year, according to Eichenbaum.
“The numbers are hard, but almost every economist that I know thinks if you put taxes on tariffs, which is just a tax, part of that is going to show up with higher prices,” he said.
A study by the Federal Reserve Bank of Atlanta found that Trump’s tariffs “could raise consumer prices on everyday retail purchases, such as food and beverage items and general merchandise, covering about a quarter of the total consumption basket, by 0.81 percent to 1.63 percent.” Canada’s common imports to the U.S. include wood, alcohol, cotton, cereal, flour, charcoal and carpets.
Other major ticket purchases, like automobiles, will also become more expensive. During manufacturing, cars often cross between Canada and the U.S. multiple times, also incorporating newly tariffed materials like steel and aluminum and incurring taxes at each border crossing.
Eichenbaum said the U.S. economy has already been slowing down and will only be further impacted by the tariffs. “Consumers, if times are weird, they don’t like uncertainty,” he said. “You’re seeing a general pullback, and that’s contributing to a general slowdown in the economy … I think it’ll be exacerbated if we go through with the tariffs.”
Americans won’t just see more expensive items on shelves and in stores, but also higher wages and interest rates.
“Today’s reckless decision by the U.S. administration is forcing Canada and the U.S. toward recessions, job losses and economic disaster,” Canadian Chamber of Commerce CEO Candace Laing said in a statement.
“Tariffs are a tax on the American people,” Laing added.
