Trump trade war with Canada escalates as Trudeau warns of economic collapse and retaliates

Canadian Prime Minister Justin Trudeau has denounced Donald Trump’s decision to impose new tariffs on Canadian goods as a “dumb” trade war and accused the former US president of aiming to destabilise Canada’s economy. Speaking in Ottawa, Trudeau contended that the ultimate goal of the US administration’s aggressive trade policies was to undermine Canadian sovereignty and pave the way for an American annexation of its northern neighbour.

The United States announced a 25 per cent tariff on Canadian and Mexican exports, alongside a 10 per cent levy targeting Canadian energy. In response, Canada has implemented retaliatory tariffs on US$107 billion worth of American goods. Trudeau stressed the importance of resilience during what he described as a historic challenge for Canada. The first wave of tariffs targets C$30 billion of imports immediately, with the remainder coming into effect within three weeks, allowing companies time to adjust their supply chains.

Addressing the potential consequences of the trade war, Trudeau delivered a stark warning about economic fallout in the United States. He highlighted how increased tariffs would lead to rising prices for consumers, higher inflation and significant job losses. Trudeau criticised Trump’s claims linking the tariffs to Canada’s alleged failure to stop fentanyl smuggling as baseless, asserting that the US Drug Enforcement Administration’s own findings contradict these accusations.

The Canadian prime minister also reached out to US citizens, warning that their government’s trade policies would have a broader impact on American industries, from manufacturing to energy. He warned that markets had already begun to falter, and the ripple effects of these policies would devastate thousands of workplaces reliant on Canadian trade. Trudeau also rejected Trump’s suggestion that Canada should relinquish its sovereignty, declaring: “We will never be the 51st state.”

Provinces across Canada have responded swiftly to the tariffs, showcasing rare political unity in opposing American policies. Ontario Premier Doug Ford announced harsh countermeasures, including a 25 per cent export tax on electricity supplied to US states and a prohibition on American spirits and wines in provincial retail outlets. Other premiers, from Quebec to Nova Scotia, echoed these concerns, with warnings of widespread job losses and growing economic uncertainty.

While Trudeau’s leadership comes to a close as the Liberal Party prepares for its upcoming transition, he underscored Canada’s capacity for overcoming adversity. “We have faced tough times before and emerged stronger. This moment will be no exception,” Trudeau declared. Economic analysts caution that both the US and Canada will bear significant damage if the current tariffs persist or escalate further, with long-term consequences for North American trade stability.