The global trade landscape is on shaky ground as Canadian Prime Minister Justin Trudeau accuses former US President Donald Trump of attempting to “collapse the Canadian economy” through aggressive tariffs. The accusation follows Trump’s announcement of a sweeping 25 per cent tariff on Canadian imports, which took effect on Tuesday.
In a swift response, Canada implemented its own 25 per cent counter-tariffs on American goods worth C$30 billion ($33 billion). Trudeau warned that if the US restrictions were not lifted within three weeks, Canada would escalate further, slapping tariffs on an additional C$125 billion ($138 billion) in US imports.
“This is a very dumb thing to do,” Trudeau said in a press conference in Ottawa.
“[Trump] wants to see a collapse of the Canadian economy because that would make it easier to annex us. We will never be the 51st state.”
The economic standoff comes amid broader trade tensions, as Trump also imposed tariffs on Mexico and China. The move has sent US stock markets tumbling, with indexes falling over one per cent at opening on Tuesday. Analysts fear the tariffs could spark a global trade war, with retaliatory measures rippling across industries.
Ontario Premier Doug Ford announced his province would retaliate by slapping a 25 per cent tariff on Canadian electricity exports to the US. Ontario, a key supplier of power to several American states, is leveraging its energy exports as a bargaining tool. Ford also vowed to remove American liquor from provincial stores and terminate a contract with Elon Musk’s Starlink.
Trump fired back on his Truth Social platform, warning that any retaliatory tariff imposed by Canada would be met with an immediate “reciprocal tariff” increase from the US. Meanwhile, Mexico’s President Claudia Sheinbaum has signalled upcoming retaliatory measures, set to be announced Sunday.
China has also entered the fray, filing a formal complaint with the World Trade Organization (WTO) over Trump’s tariffs. Beijing increased existing levies on American goods, raising tariffs from 10 per cent to 20 per cent on a range of imports. China’s commerce ministry did not mince words, calling the US tariffs a “serious violation of WTO rules” that “undermine the foundation of China-US economic and trade cooperation.”
“China will, in accordance with WTO rules, firmly safeguard its legitimate rights and interests and defend the international economic and trade order,” the ministry said in a statement.
Beijing has hit back with its own tariffs, targeting key US agricultural products, including wheat, corn, cotton, and chicken, with additional levies of up to 15 per cent set to take effect next week. China’s Ministry of Commerce also placed 15 American companies, including drone manufacturer Skydio, on an export control list, effectively barring them from doing business in the Chinese market.
Embassy of the People’s Republic of China in the United States of America posted,
“If the US insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end.”
Chinese Foreign Ministry spokesperson Lin Jian declared in a briefing on Tuesday.
“The Chinese people have never feared evil or ghosts, nor have we ever bowed to hegemony or bullying.”
Trump’s trade war is already rattling global markets. The US dollar hit its lowest point since November, while European markets saw a brief uptick following a German debt relief deal. However, US economic indicators show signs of strain. The Atlanta Federal Reserve’s GDPNow model estimates that US GDP will shrink by an annualised rate of 2.8 per cent in the first quarter, fueling fears of a “Trumpcession.”
On 6 January 2025, Justin Trudeau announced his resignation as Liberal leader and Prime Minister of Canada, effective 24 March 2025. His popularity has declined rapidly after initial success, with his party losing seats in 2021, forcing minority governments with the NDP. Recently, his support hit a record low due to key ally departures and cost-of-living pressures. In December, Deputy PM and Finance Minister Chrystia Freeland resigned following tensions over the incoming Trump administration.
Trudeau has now warned Canadians to brace for economic turbulence but insisted that the countermeasures are necessary. “We will also be challenging these illegal actions by filing dispute resolution claims at the WTO and through the USMCA,” he stated.
“In the meantime, our tariffs will remain in place until the US tariffs are withdrawn and not a moment sooner.”
With trade tensions at a boiling point, all eyes are now on how Trump, Trudeau, and other world leaders will navigate the escalating economic standoff. The next few weeks could determine whether this turns into a full-scale global trade war or a high-stakes negotiation with billions of dollars—and international stability—hanging in the balance.
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