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A Made In Canada label is shown in Brampton, Canada, on February 3, 2025. Sweeping tariffs imposed by US President Donald Trump on many Canadian products, including dairy, force many Canadians to check labels for Canadian-made or produced products as a response to potential higher grocery costs. (Photo by Mike Campbell/NurPhoto)NO USE FRANCE
Tariffs were postponed. For a day. Now they’re back. For now.
After a short break, President Donald Trumpannounced Thursday that tariffs for Canada and Mexico are back on for March 4, along with an additional 10% tariff for China. That’s the plan as of right now, but things could change, as we’ve seen in recent days. On Wednesday, Donald Trump postponed across-the-board 25% tariffs on Canada and Mexico until April 2. That pause came shortly after Trump said the tariffs were, in fact, going ahead on March 4 – and after he paused them for 30 days last month. The White House also said steel and aluminum tariffs are still planned for March 12, as well as retaliatory tariffs in early April. Is that clear ... as mud?
The on-again-off-again tariffs are driving politicians in Canada and industry on both sides of the US-Canada border mad. The market hates uncertainty, and Trump’s tariff plans and contradictory statements are leaving policymakers and the business community wondering what exactly he has planned for the long term.
Commerce Secretary Howard Lutnick did offer some clarity on Trump’s tariff goals, saying that Canada and Mexico might be able to avoid duties if they can convince the administration they’ve done “an excellent job” on border security, but it’s anyone’s guess whether a) that’s true and b) what qualifies as an “excellent job.” Besides, any clarity ought to be taken with a grain of salt, given that Trump has also suggested tariffs are a means to balance US trade deficits, to force Canada to spend more on defense, to crush the country economically — and to bring it further under US control as the 51st state.Ontario Premier Doug Ford speaks during a press conference in Toronto, Canada, on May 30, 2024.
Three amigos, or two?
Ford called on Mexico to match Canadian and American tariffs on Chinese imports to stop it being a “backdoor for Chinese cars, auto parts, and other products."
Ford’s province depends on the CA$11.6 billion auto industry, with integrated supply chains across the border. Any threat to that could cause an economic meltdown.
During the negotiations of the new NAFTA — the United States-Mexico-Canada Agreement — in 2019, some Conservative critics of Justin Trudeau’s government faulted the Canadians for making common cause with Mexico in resisting US demands. They are getting an early start this time ahead of the deal’s review in 2026.
“If Mexico won’t fight transshipment by, at the very least, matching Canadian and American tariffs on Chinese imports, they shouldn’t have a seat at the table or enjoy access to the largest economy in the world,” Ford said.
Deputy Prime Minister Chrystia Freeland, who played the pivotal role in negotiating USMCA withUS Trade Representative Robert Lighthizer, has repeatedly emphasized that Canada and the United States are in lockstep on tariffs on China.
Graeme Thompson, a senior analyst with Eurasia Group's global macro-geopolitics practice, says it is hard to know if they will remain in lockstep if Donald Trump’s tariffs on China get too high.
“Given Canada’s dependence on the US market, I think Ottawa will be tempted to do things that only a few years ago would have seemed impossible – including imposing significant new tariffs on China and abandoning Mexico if necessary to preserve its trade and security relationships with Washington.”
Lighthizer, who is expected to return to his job under Trump 2.0, is laying the groundwork for a new tariff policy that would include a 20% tariff on all goods coming into the US.
If there is no exemption for Canada, the policy would also lead to a sudden and dramatic slowdown in the Canadian economy.
Expect the Canadians to remind the Americans that Canada exported $124 billion of oil to the United States last year. Any new tariffs on that trade would increase prices at the pump for Americans, which Trump’s party would pay for in the 2026 midterms.