Canada Threatens 25% Retaliatory Tariffs On U.S. Goods

Prime Minister Justin Trudeau announced on Monday that Canada will impose 25% tariffs on C$155 billion ($107 billion) worth of United States goods starting from Tuesday if President Donald Trump’s administration follows through with its proposed tariffs on Canadian goods.

Trudeau said in a statement that Canada will impose tariffs on the remaining C$125 billion starting Tuesday, and into effect in 21 days.

“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau added

The first tranche of retaliation includes a list of 1,256 products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.

The cost of imports associated with some of the major products is cosmetics and body care worth C$3.5 billion, appliances and other household items worth C$3.4 billion, pulp and paper products worth C$3 billion, plastic products worth C$1.8 billion, among others.

“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau said, adding that they would violate the US-Mexico-Canada free trade agreement signed by Trump during his first term.

Mexico’s president, Claudia Sheinbaum, was expected to announce her response on Tuesday morning, the country’s economy ministry said.

Since winning November’s presidential election, Trump has focused on China, Canada and Mexico, threatening the three markets with steep duties on their exports unless they reduced the “unacceptable” levels of illegal drugs crossing into the US.

While he slammed a 10% tariff on China last month, Trump has repeatedly delayed the imposition of tariffs on Canada and Mexico.

The president has pledged to bring down prices in the US, but economists have warned that his trade plans could adversely affect consumers in the country.

A 25% tariff on Canada and Mexico and a 10% levy on China would amount to “the largest tax increase in at least a generation”, according to the Peterson Institute for International Economics, a thinktank, which estimated such a move would cost the typical US household more than $1,200 each year.

Trump has vowed to go further, threatening to introduce “reciprocal” tariffs on countries that have their duties on goods made in the US.