Canada slaps billions in tariffs on American goods. Will US-Canada tensions escalate further?

Amid the escalating trade tension, Canada on Tuesday announced that it will impose retaliatory tariffs on an additional C$125 billion worth of U.S. imports within 21 days, beginning with a 25% levy on C$30 billion worth starting Tuesday.

The move comes after US President Donald Trump on Monday dismissed the possibility of a eleventh-hour deal with Canada and Mexico to avoid major tariffs. He also signed an order to increase tariffs on China. Last month, Trump had announced tariffs on imports from Canada and Mexico but put them on hold.

The duties stand to impact over $918 billion worth of US imports from both countries.

Are tensions likely to increase between US and Canada?

In a post, Justin Trudeau said, “The moment U.S. tariffs came into effect this morning, so did the Canadian response. Canada will be implementing 25% tariffs against $155 billion of American products.”

“Starting with $30 billion worth of goods immediately, and the remaining $125 billion in 21 days’ time,” he further said.

The tension is likely to escalate between the two countries as Canada Prime Minister Justin Trudeau said the tarriff will remain in place if US President Donald Trump's administration follows through with its proposed tariffs on Canadian goods.

"Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures," Trudeau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

Trudeau also said that “there is no justification” for Trump's tariffs.

“Because of the tariffs imposed by the US, Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs," he said. “Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”

Meanwhile Mexico President Claudia Sheinbaum took a wait and watch strategy depending on what Trump would say. “So whatever his decision is, we will make our decisions and there is a plan, there is unity in Mexico.”

The broad tariffs, especially on Canada and Mexico, could disrupt supply chains for key industries like automobiles and construction materials, potentially raising costs for households.

This may make it harder for Trump to deliver on his campaign promise of lowering prices for Americans.

(With inputs from agencies)