American Tariffs
At 12:01 am on Tuesday, March 4th, President Trump lifted the 30-day pause on his February 1st Executive Order entitled Imposing Duties to Address the Flow of Illicit Drugs Across our Northern Border, which has implemented a first wave of 25% tariffs on Canadian and Mexican goods and 10% on Canadian imports under the International Emergency Economic Powers Act (IEEPA), with limited exceptions.
Since then, the President granted on Wednesday a one-month exemption for cars and trucks that are originating under the CUSMA, and then in breaking Thursday afternoon news, he granted yet another temporary reprieve until April 2, on Mexican and Canadian goods covered by CUSMA. Moreover, any potash not covered under CUSMA will now be subject to 10% tariffs in lieu of 25%. The White House says roughly 50% of Mexican imports and 62% of Canadian imports are not CUSMA-compliant, and so will continue to be subject to tariffs.
As a result of this temporary reprieve, Canada has confirmed that it will “not proceed with the second wave of tariffs on $125B of U.S. products until April 2nd, while we continue to work for the removal of all tariffs.” At the time of publication, this is a developing news story.
Even in light of these breaking developments, President Trump continues to threaten the implementation of additional tariffs throughout the next month, including reaffirming on Thursday that he plans on going forward with 25% tariffs on steel and aluminum on March 12th and larger global reciprocal tariffs on April 2nd, which would stack onto the 25% tariffs already implemented. He has also threatened to impose further retaliatory tariffs in response to any tariffs Canada puts forward in response.
In this Canada – Trump Administration 2.0 Update #13, Alex Steinhouse of the Fasken Government Relations and Political Law team has more on this week’s developments thus far.
Federal Canadian Response to Implementation of Tariffs
At the same time, Prime Minister Trudeau announced that Canada has implemented the long-threatened phase one of its reciprocal tariffs plan, applicable to $30 billion worth of American goods. The full list of American goods now subject to 25% Canadian tariffs can be found here. It includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and certain pulp and paper products.
A second phase on $125 billion more American goods that will face tariffs, should the American administration not reverse course, was to take effect following a 21-day public consultation, ending on March 25th, 2025. However, as a result of Thursday’s temporary reprieve, Minister Dominic LeBlanc has confirmed that it will “not proceed with the second wave of tariffs on $125B of U.S. products until April 2nd, while we continue to work for the removal of all tariffs.”
The list of proposed American goods for the second phase can be found here. It includes products such as electric vehicles, fruits and vegetables, beef, pork, dairy, electronics, steel, aluminum, trucks, and buses. However, Canada may implement tariffs on goods found on the proposed list prior to March 25th, 2025, should the US impose additional tariffs on Canada in the days to come.
The Canada Border Services Agency has issued a Customs Notice that provides information on the surtax provisions effective March 4th, 2025, on certain goods originating in the United States. The Customs Notice can be found here.
The federal government has also established a remission process to “consider requests for exceptional relief from the tariffs imposed as part of our response to the US applying unjustified tariffs on Canada.” Requests will be assessed by the Department of Finance, in consultation with relevant federal departments. The Minister of Finance ultimately has the authority to recommend remission to the Governor in Council, which must then approve it.
More generally, the scope of goods subject to tariffs could also be further increased if additional American tariffs are imposed on Canadians. Other measures, including export taxes on energy products, minerals and fertilizers are also being considered, should the President not immediately back down on the tariffs. In that respect, the Prime Minister has said that no part of the country should be carrying a greater burden than any other.
At a news conference Tuesday morning on Parliament Hill, Prime Minister Trudeau said President Trump is doing something “very dumb” by launching a “trade war”, which will have serious implications for both American workers and consumers. The Prime Minister says the President is trying to instigate "a total collapse of the Canadian economy" because he thinks that it will "make it easier to annex us."
However, the Prime Minister insisted that "when it comes to defending our great nation, there is no price we all aren't willing to pay," and so Canada will not back down in the face of this "completely bogus and completely unjustified" trade action.
As such, the Prime Minister once more suggested that the federal government is prepared to provide enhancements to employment insurance. We are waiting on further details in the coming days, and whether any legislative measures will be advanced, given the governing Liberals will elect their new leader on March 9th, while Parliament is currently prorogued until March 24th.
Minister of Employment, Workforce Development and Labour Steven MacKinnon had suggested in this regard Tuesday that this relief will not be as wide in scope as was provided by the government during the pandemic, as the impact on workers and business will not be as immediately and as widely felt.
The Prime Minister has also mentioned the need for measures to protect businesses from potential “predatory” takeovers. On Wednesday, Industry Minister François-Philippe Champagne updated the Investment Canada Act guidelines so as to consider Canada’s economic security as a reason to subject a foreign investment in Canada to a national security review. In a statement, the Minister explained that given the considerable current economic flux, some Canadian businesses could see their valuations decline, and these changes will give the government broader scope to review opportunistic or predatory foreign investments.
The federal government has also requested World Trade Organization consultations with the US on the imposition of the American tariffs.
American Response to Prime Minister Trudeau’s Remarks
The American response since the tariff imposition has been scattered.
Earlier Tuesday morning, President Trump had written on social media that Canadian companies can avoid tariffs by moving to the United States. He also posted about US banks not being able to operate in Canada and further posted about tariffs being linked to bringing auto plants back to the US.
Then, in response to the Prime Minister’s press conference, President Trump posted on social media: “Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by a like amount!”
At his address to a joint session of Congress, President Trump doubled down on global reciprocal tariffs, while mentioning Canada and Mexico’s failure to stem the fentanyl crisis, and the trade deficits with both countries.
Also earlier on Tuesday, Vice-President JD Vance dismissed Canadian efforts to better secure the border, saying that “the Canadians have allowed a lot of fentanyl to come into the country […] It's not a defence to say more has come from Mexico, because way too much has come from Mexico, too,” he said.
Commerce Secretary Howard Lutnick also claimed that the tariffs are related to American efforts to fight the scourge of fentanyl. He later said on Tuesday that he thinks President Trump is going to “work something out with [Canada and Mexico as soon as Wednesday]. I think he’s going to figure out, you do more, and I’ll meet you in the middle some way.” Lutnick said, however, that this would not mean eliminating or pausing the tariffs but rather reducing the scope of the tariffs.
On Wednesday, Prime Minister Trudeau and President Trump spoke for fifty minutes, a conversation described as “heated and chaotic at times, where the President was joined by Vice-President JD Vance and Commerce Secretary Howard Lutnick, according to a senior Canadian official.”
The President is said to have demanded Canada drop its retaliatory tariffs, insisted that Canada has not done enough to interdict fentanyl at the border, and listed a litany of other trade complaints, including the GST, digital services tax, and dairy supply management, without mentioning Defence spending.
Prime Minister Trudeau is said by sources to have refused to drop Canada’s retaliation efforts but agreed that Canada would be willing to delay phase two, depending on whether the President agreed to accept tariff-free access to CUSMA.
On Thursday, the Prime Minister reiterated that message publicly, saying Canada is not interested in a piecemeal approach to tariffs. He described his call with the President as “colourful”, and said the “trade war will continue for the foreseeable future.”
On Thursday afternoon, the President granted yet another temporary reprieve, until April 2, on Mexican and Canadian goods covered by CUSMA. The White House says roughly 50% of Mexican imports and 62% of Canadian imports are not CUSMA-compliant, and so will continue to be subject to tariffs.
Moreover, any potash not covered under CUSMA will now be subject to 10% tariffs in lieu of 25%. Earlier, Agriculture Secretary Brooke Rolling had said in an interview “everything is on the table” and she is “hopeful” that the administration would proceed with exemptions on Canadian agricultural products for the benefit of the American agricultural sector.
Lutnick and Minister Dominic LeBlanc also continue to connect throughout the week on how to bridge the impasse.
Finally, the Senate confirmation for President Trump’s pick for US ambassador to NATO, Matthew Whitaker happened on Tuesday. Mr. Whitaker is pushing for NATO allies to spend 5% of GDP: “NATO allies must meet their obligations. The United States will no longer subsidize nations that refuse to pay their fair share. That is why, if confirmed, I will work to advance a policy of peace through strength by ensuring that all NATO members meet a minimum defence spending level of five per cent.”
Federal Opposition Leaders
Conservative opposition leader Pierre Poilievre said that the President has “stabbed America’s best friend in the back,” and that Canada will fight back. He reiterated calls for dollar-for-dollar retaliatory tariffs. Mr. Poilievre also wants Parliament recalled to “pass new border controls, agree on trade retaliation and prepare a plan to rescue Canada's weak economy.”
NDP Leader Jagmeet Singh also called for Parliament to be immediately recalled to pass legislation to support workers, including bolstering employment insurance and investments to create union jobs, as well as unanimous support for retaliatory measures. He says an election is secondary to that goal.
Bloc Québécois leader Yves-François Blanchet opposes threatening to cut off electricity supplies, calling it a “strange idea.”
Provincial Responses
At Tuesday’s First Ministers’ meeting, Premiers appeared united with the federal government in condemning the American tariffs and the first measures Canada has proceeded to invoke in retaliation.
After the meeting, First Ministers released a statement on their efforts to eliminate internal trade barriers. They have agreed to take meaningful action, including developing a 30-day or better service standard to get people working faster, and provide a plan for Canada-wide credential recognition, while considering jurisdictional specificities such as language provisions, by June 2025. They also agreed to soon allow Canadians in most regions to buy alcohol from other jurisdictions.
Meanwhile, Ontario Premier Doug Ford said Ontario is also prepared to “fight like we've never fought before.” He is threatening to impose a 25% surcharge on power Ontario sells to the New York, Michigan and Minnesota, come Monday, should American tariffs not be removed. He also said he's open to eventually cutting off energy supplies entirely, which could impact 1.5 million American customers. He has also threatened to surcharge critical minerals exports or cut them off entirely as well.
A news report suggests that Lutnick called Ford on Tuesday; the call was described as “tough” and “aggressive”, with the Premier refusing to back down to demands that the Premier stand down on retaliatory measures. Sources say that Lutnick intimated that the tariffs are part of a “negotiation toward a trade deal.”
Québec Premier François Legault fears the province could lose up to 160,000 jobs because of President Trump’s actions, and is looking to implement relief measures including a liquidity program for businesses affected by tariffs. The program will offer loans of up to $50 million per company for a period of 12 months. The provincial government also wants to incentivize diversification efforts by increasing available funds at Investissement Québec in its upcoming budget. The province will also look to amend its public procurement rules by imposing up to a 25% penalty on American bids.
British Columbia Premier David Eby estimates that tariffs could lead to a cumulative loss of $69 billion in economic activity in BC between 2025-28, and the loss of 124,000 jobs by 2028, an annual decline in corporate profits of between $3.6 billion and $6.1 billion and a reduction in annual government revenue between $1.6 and $2.5 billion. The Premier has announced there will be support for businesses and individuals impacted by the tariffs, but he did not elaborate on who will qualify or how it will work.
Alberta Premier Danielle Smith said in a statement that Alberta fully supports the federal response. The Premier met with her Cabinet Tuesday and Wednesday, and has announced that Alberta will stop buying American alcohol, change government procurement processes to avoid purchasing American goods and services, and step up efforts to buy Canadian. The Premier is opposed to any export tax on oil and gas.
Manitoba Premier Wab Kinew has launched tax deferrals for businesses affected by the tariffs.
Finally, Saskatchewan Premier Scott Moe is considering various countermeasures options: “Canada's response needs to be economically sound and reasoned. It should not result in the same kind of self-inflicted harm that Trump is imposing on his citizens,” he said in a statement. However, he is opposed to imposing any restrictions on potash and uranium exports.
