Tit-for-tat in trade war: Canada slaps 25% retaliatory tariffs on US goods

Canada has announced retaliatory tariffs on the US, signalling the start of a trade conflict between the two neighbouring countries.

Prime Minister Justin Trudeau introduced "far-reaching" tariffs of 25% on $106.6 billion worth of American goods, including beer, wine, household appliances, and sporting goods, Caliber.Az reports via foreign media.

This action mirrors the 25% tariff imposed by US President Donald Trump on imports from Canada and Mexico, as well as a 10% tariff on China, citing concerns over illegal immigration and drug trafficking.

Trudeau emphasized that he would not back down in defending Canadians, but acknowledged the consequences for people on both sides of the border. "We didn’t ask for this," he said at a news conference on February 1 evening.

The Canadian prime minister announced that tariffs on $30 billion worth of US goods would take effect on Tuesday, with another $125 billion to be targeted in 21 days, allowing businesses time to adjust. The items affected include American beer, wine, bourbon, fruits, vegetables, clothing, shoes, household appliances, and furniture, along with lumber and plastics. Non-tariff measures, such as those related to critical minerals and procurement, are also under consideration.

Economists warn that these tariffs, along with those from the US, Canada, Mexico, and China, could lead to higher consumer prices. A tariff is a tax imposed on imported goods, proportional to their value.

Christopher Sands, director of the Wilson Center's Canada Institute, described the tit-for-tat tariffs as "mutually assured destruction" and warned of the rapid negative impact they could have on people’s lives. He noted that there would be no time for adjustment, calling it "a massive hit" that would quickly make life harder for many.

While these tariffs are part of Trump's economic strategy to boost the US economy, protect jobs, and raise tax revenue, they have raised concerns globally. Canada, Mexico, and the US have closely integrated economies, with approximately $2 billion worth of goods crossing the borders daily. Canada is the US's largest foreign supplier of crude oil, with 61% of the oil imported into the US between January and November last year coming from Canada. While the 25% tariff applies to most Canadian goods, the energy sector faces a lower 10% tariff.

The White House argued that these tariffs were necessary to hold China, Mexico, and Canada accountable for halting the flow of dangerous drugs into the US. However, Trudeau disagreed with the suggestion that the shared border posed a significant security concern, pointing out that less than 1% of fentanyl entering the US comes from Canada, and less than 1% of illegal migrants cross through the border.

Trump has signalled he is prepared to escalate the tariffs further if countries retaliate, as Canada has done.

Before announcing the tariffs, Canada had pledged more than $1 billion to enhance security at its border with the US. Trudeau revealed he had not spoken to Trump since the US president assumed office.

Mark Carney, former head of Canada's and England's central banks, expressed concerns that the tariffs would negatively impact economic growth and raise inflation. He also warned that the tariffs could damage the US's global reputation. Carney is also considered a potential successor to Trudeau as leader of Canada's Liberal Party.

By Tamilla Hasanova