Canada hits US with retaliatory tariffs after warning of 'existential threat'
Canada has responded to new tariffs from the US with retaliatory import taxes of its own - after warning of an "existential threat" from its neighbour.
US President Donald Trump has imposed 25% tariffs on products entering the US from Canada and Mexico - which became effective overnight - and has increased a levy on goods coming from China.
Canada has responded with tariffs on tens of billions of dollars' worth of products imported from the US. Its provincial leaders have suggested going further.
Trump says he is protecting US jobs and manufacturing, and trying to prevent illegal migration and drug trafficking. But experts say he is likely to push up prices for consumers in the US and abroad.
The three countries targeted are America's top trading partners, and the tit-for-tat measures have also prompted fears of a wider trade war.
Tariffs are a tax on imports from other countries, designed to protect against cheaper competition from elsewhere and boost businesses and jobs at home.
In addition to the 25% tariffs on products entering from Canada and Mexico, Trump is also charging a 10% tariff on Canadian energy.
Trump's team have characterised tariffs as a key negotiating tool. The US president wants to clamp down on the powerful opioid fentanyl, and has variously blamed the other countries for the drug's arrival in the US.
A statement from Canadian Prime Minister Justin Trudeau said there was "no justification" for the new US tariffs, because less than 1% of the fentanyl intercepted at the US border came from Canada.
Trudeau's words were echoed by Mexican President Claudia Sheinbaum, who said there was "no motive, no reason, no justification" for Trump's move. Speaking on Tuesday, she vowed to issue her own "tariff and non-tariff measures" - but said further details would be given on Sunday.
In his statement, Trudeau noted that his country had taken steps to further limit the flow of fentanyl during a month-long period in which Trump's new tariffs were paused.
Anticipating the start of the new American tariffs, Trudeau's statement outlined Canada's retaliatory measures - under which a 25% tariff will be imposed on C$155bn (US$107bn; £84bn) of American goods:
- A tariff on C$30bn worth of goods will become effective immediately
- Tariffs on the remaining C$125bn on American products will become effective in 21 days' time
Earlier on Monday, Foreign Minister Melanie Joly told reporters that Trump's tariffs represented an "existential threat to us", because jobs were at risk.
Immigration Minister Marc Miller warned that as many as a million jobs in Canada were at risk if the tariffs were implemented, given how intertwined trade was between the two countries.
"We can't replace an economy that is responsible for 80% of our trade overnight and it's going to hurt," he said on Monday.
Speaking to the AFP news agency, a car manufacturing employee in the Canadian province of Ontario said people were indeed "pretty scared" of being laid off. "I just bought my first house," Joel Soleski said. "I might have to look for work elsewhere."
The sector is one that could be badly affected by the new tariffs regime in North America. Car parts may cross US-Canada border several times during the manufacturing process, and so might be taxed on multiple occasions.
The tariffs were called "reckless" by the Canadian Chamber of Commerce, whose president Candace Laing cautioned that the move would force both Canada and the US towards "recession, job losses and economic disaster".
Ms Laing warned that the tariffs would also increase prices for Americans, and force US businesses to find alternate suppliers that she said "are less reliable than Canadian ones".
Canadian provincial leaders have vowed their own responses. Ontario Premier Doug Ford mooted the possibility of cutting off Canadian electricity supplies and exports of high-grade nickel to the US.
Canada exports enough electricity to power some six million American homes.
"If they want to try to annihilate Ontario, I will do anything, including cutting off their energy, with a smile on my face," Ford told NBC on Monday.
Meanwhile China - which now faces tariffs of 20% after Trump doubled an earlier levy - has vowed to fight any trade war to the "bitter end". It has announced its own counter-measures - including tariffs on a range of US agricultural and food products.