Canada hits back after Trump-imposed tariffs come into effect

US stocks continue sell-off after fears of trade war worry investors

Canada launched retaliatory tariffs on $30 billion worth of US goods on Tuesday, following President Donald Trump's decision to impose 25 per cent tariffs on Canadian products.

Prime Minister Justin Trudeau said Canada was prepared to fight back against what he called “unjustified” US actions. Ottawa intends to add 25 per cent tariffs on to an additional $125 billion in three weeks if Washington has not lifted its levy.

Mr Trump's decision to launch a trade war with Canada, Mexico and China had an immediate impact on the markets. Fears rattled investors as Wall Street on Tuesday continued a sell-off that started on Monday.

“US tariffs continue to unsettle businesses and financial markets,” David Kohl, chief economist at Julius Baer, wrote to clients.

The Dow Jones plunged 670.25 points - or 1.55 per cent - after falling almost 650 points the previous day. The S&P 500 and Nasdaq Composite also ended in the red.

Julius Baer estimated that the annual value of US imports affected by the Trump tariffs would climb from under $500 billion to more than $1.5 trillion.

“At the same time, the erratic actions have triggered record-high trade uncertainty and rising US import volumes due to potential tariff increases,” Mr Kohl said.

Mr Trump has also threatened to enact a 25 per cent tariff on all aluminium and steel products beginning on March 12. Experts have previously told The National that the action will have a limited impact on Gulf exports. Mr Trump has also recently ordered the government to consider potential tariffs on copper.

Ottawa is expected to challenge the tariffs at the World Trade Organisation and through the US-Mexico-Canada free trade agreement signed in 2020 during Mr Trump's first term.

“There is absolutely no justification or need whatsoever for these tariffs today,” Mr Trudeau said, addressing Mr Trump directly.

“It's not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do.”

Mr Trudeau was referencing a recent opinion piece published by the Journal in which its editorial board called the President's decision “the dumbest tariff plunge”.

Mr Trump has said his reason for enacting the tariffs was to force both countries into protecting their borders and preventing illegal fentanyl from crossing into the US.

Last month, Canada named a fentanyl czar and committed nearly $1 billion to border protection and Mexico committed to sending 10,000 troops to their northern border, which prompted Washington to delay the decision to enact tariffs by 30 days.

Mr Trudeau said the new measures have been effective.

“Our actions are working,” he said. “We stepped up. We engaged closely and constructively with the President and his administration. We did everything we promised. We stuck to our word. And we did it because we believe in working together to protect our citizens.”

The Canadian leader, who has announced his intention to resign once his Liberal Party elects a new leader next week, expressed exasperation at the direction of Washington under Mr Trump.

“The United States launched a trade war against Canada, their closest partner and ally, their closest friend at the same time, they're talking about working positively with Russia, appeasing Vladimir Putin, a lying, murderous dictator. Make that make sense,” he said.

When asked why he believed the US leader was imposing the sanctions, Mr Trudeau said it was likely an attempt to crush the Canadian economy.

“He has said repeatedly that what he wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us, Mr Trudeau said. “That's never going to happen. We will never be the 51st state.”

Meanwhile, Mexico's President Claudia Sheinbaum said her country would impose “tariff and non-tariff measures” against the US from Sunday.

She said that Mexico had developed “strong actions” to tackle organised crime and fentanyl trafficking over the northern border, and that Mexican officials had participated in bilateral security and trade meetings that had “led to substantive co-operation agreements”.

“There is no reason to justify these actions,” she said. She would continue to seek a negotiated solution with Washington following its “unilateral” decision, she added.