After weeks of bracing for a trade war with the US, Canada has – for now – dodged a 25% tariff that Donald Trump threatened to impose on the country as soon as he assumes office.
However, President Trump had on Monday, said the tariffs on Canada and Mexico could come on 1 February and directed federal officials to review US trade relationships for unfair practices, including those with Canada, Mexico and China.
So many sectors of the world have begun feeling the impact of Trump’s presidency – the health sector in the form of WHO withdrawal and now, the global economy.
Trump had previously pledged import duties of 25% on Canada and Mexico, 10% on global imports and 60% on Chinese goods.
Trump, who was sworn in on Monday, January 20, warned in his inaugural address that the US “will tariff and tax foreign countries to enrich our citizens”.
On Monday, Canadian officials appeared relieved at the reprieve, but its government warned the tariff threat was still real. Canada is highly dependent on trades with the US, with roughly 75% of Canadian exports heading south.
Canada’s Foreign Minister Melanie Joly last week had warned the trade tariffs could spark the “biggest trade war between Canada and the US in decades”.
Ottawa is preparing counter-tariffs against Trump’s, in response to the threat, and this is reportedly worth billions of dollars. Members of the Canadian Prime Minister Justin Trudeau’s cabinet are currently in Quebec for two days of meetings focused on the US-Canada relationship.
On Monday, Joly told reporters that officials will continue efforts to lobby US counterparts on the benefits of trade between the two nations, which summed up an estimated $909bn in 2022.
“We are very cautious,” Joly had remarked, shortly before Trump said he was considering imposing the trade tariffs next month.
The leader of Canada’s province of Alberta, Danielle Smith, explained in a statement that the delay in Trump’s tariffs was an “implied acknowledgement that this is a complex and delicate issue with serious implications for American and Canadian workers, businesses and consumers”.
Canada, the US and Mexico had renegotiated a trilateral free trade deal during Trump’s first term in office.
The presidential memo Trump signed after his inauguration directs federal agencies to assess how that deal affects American “workers, farmers, ranchers, service providers, and other businesses”.
It also asked the commerce and homeland security secretaries to check the “unlawful migration and fentanyl flows” from Canada and Mexico.
In November, Trump said his administration would impose across -the-board tariffs on Canadian and Mexican goods in an effort to force the countries to crack down on illegal immigration and drug smuggling into the US.
While both the northern and southern US borders have reported unlawful crossings and drug seizures, the illegal immigration numbers at the border for Canada are relatively lower than those at the Mexico border, according to official data.
In December 2024, Canada promised to implement C$1.3bn ($900m; £700m) worth of new security measures along its US border, including strengthened surveillance and a joint “strike force” to target transnational organised crime.
Trump’s tariffs are a central part of his economic vision as he sees them as a way of growing the US economy, protecting jobs and raising tax revenue, however, many economists have warned the policy could lead to higher prices for Americans and inconveniences for companies hit by foreign retaliation, and slow.
