Trump initiates trade war, signing order hitting Canada with massive tariffs; Trudeau to retaliate

CTV News Channel brings you ongoing coverage as Canada braces for potential U.S. tariffs

U.S. President Donald Trump made good on his threat to hit Canada with massive tariffs on Saturday, signing an executive order imposing them at his Mar-a-Lago club.

On Saturday morning, the federal government was notified by the U.S. that Canada, Mexico and China were going to be hit with import tariffs.

The tariff on Canada will be 25 per cent across the board, with the exception of energy, which will be hit with a 10 per cent tariff, according to senior government sources.Citing comments Trump’s trade adviser Peter Navarro made in a call with reporters on Saturday, CNN is reporting that the smaller tariff will include electricity, natural gas, and oil, and that the president opted to go with a smaller tariff to “minimize any disruptive effects we might have.”

Trump’s major trade action is expected to take effect on Tuesday.

Shortly after receiving confirmation tariffs are coming, Trudeau held an emergency meeting with his cabinet ministers at 3 p.m. EST, and then convened a call with premiers where he was expected to brief them on Canada’s initial retaliatory response. According to a senior government source, counter tariffs ranging from $10 billion to $85 billion were discussed as a response during the cabinet meeting, though the amount keeps fluctuating. One source in cabinet said they would not be surprised if Trump doubled his tariffs if and when Canada counters.

Federal and provincial governments have been co-ordinating for several weeks on a retaliation plan, and have been engaging with and leveraging stakeholders as part of a broader “Team Canada” approach.

Sources had previously indicated Canada was readying a three-round retaliation that would start with the singling out of a small list of American-made consumer products such as Kentucky bourbon and Florida orange juice that the prime minister would be imploring Canadians to buy Canadian alternatives to. The government would then hit billions of dollars in U.S. goods with counter-tariffs.

Vowing yesterday that Canada would hit back Day 1 and not relent until Trump’s tariffs were removed, the prime minister will be announcing Canada’s initial retaliation at 6 p.m. EST in Ottawa, alongside Minister of Intergovernmental Affairs and Minister of Finance Dominic LeBlanc.

Canadian officials were informed that the tariffs would remain in place until the fentanyl overdose issue is adequately addressed, with the Americans providing the U.S. president’s concern about the issue as the reasoning for imposing tariffs.

Less than one per cent of fentanyl and illegal crossings into the United States come from Canada, with U.S. Customs and Border Protection seizing just 43 pounds of fentanyl at the northern border in the 2024 fiscal year.

Federal officials have repeatedly emphasised these and similar statistics, while initiating rounds of lobbying efforts with D.C. officials about Canada’s $1.3-billion border security enhancements in the face of Trump’s demand to crack down on the flow of migrants and drugs at the northern border.

Mexico is being hit with 25 per cent tariffs on all imports, including energy. China is being subjected to a 10 per cent tariff across the board.

Tariffs will raise prices on both sides of border

Confirmation that the U.S. is sparking a trade war with its closest ally comes after weeks of uncertainty and evolving messaging from the president and his officials about the size, scope, and timeline for tariffs.

Just yesterday, U.S. sources floated a March 1 start to Reuters, which Trump shot down within hours, affirming there was “nothing” Canada could do to avoid the imposition of Feb. 1 tariffs.

Trump initially threatened in late November to impose across-the-board 25 per cent tariffs on all imports from Canada and Mexico on “Day 1” of his second term.

That didn’t happen. Instead, he signed an executive order initiating a study on broader trade practices, to be completed by April 1.

To offer a snapshot of the scope of the bilateral relationship, Canada buys more U.S. goods than China, Japan, France and the United Kingdom combined. The U.S. sells more goods to Canada than any other country.

Canadian officials have repeatedly sought to emphasize that Trump’s tariffs will raise prices for consumers on both sides of the border.

A 25 per cent tariff could shrink Canada’s GDP by 2.6 per cent and cost Canadian households an average of $1,900 annually. South of the border, it would result in a 1.6 per cent GDP drop and an average $1,300 hit to American households.Sources have told CTV News that the federal government is also planning a potentially pandemic-sized stimulus package to help businesses and workers, with the depth of that relief dependent on what Trump dishes out, with Trudeau noting on Friday Canada could be in for hard times.

On a daily basis, $3.6 billion in goods and services cross between Canada and the U.S., making for a $1.3 trillion annual trading relationship that employs millions on both sides of the border, according to the Canadian Chamber of Commerce.

Of note given Trump’s decided to tariff energy – and Trudeau not ruling out energy export countermeasures – Canada is the number of supplier of energy to the U.S., supplying more than 99 per cent of U.S. natural gas imports, 85 per cent of U.S. electricity imports, and 60 per cent of U.S. crude oil imports, in 2023.

This is a developing story, check back for updates…

With files from CTV News’ Chief Political Correspondent Vassy Kapelos