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Canada said it would move ahead with an earlier plan to impose 25% tariffs on 155 billion Canadian dollars ($107 billion) in U.S. goods if the U.S. tariff took effect as scheduled.
Tariffs on $20.7 billion worth of goods will take effect immediately, while tariffs on the remaining $86.3 billion in U.S. products will begin in 21 days, Canadian Prime Minister Justin Trudeau said in a statement late Monday. They will remain until the U.S. trade action is withdrawn, he said.
“Because of the tariffs imposed by the U.S., Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs,” Trudeau said. “Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”
Trump, who had been threatening tariffs against Canada and Mexico since November, had accused them of failing to stem the international flow of fentanyl and other illicit drugs.
While precursor chemicals for fentanyl are known to be shipped from China to Mexico, where they are processed into the deadly opioid that is then smuggled into the United States, Canada says it has virtually no role in the international flow of fentanyl.
According to U.S. customs data, only 0.2% of the more than 20,000 pounds of fentanyl seized at the U.S. border in the 2024 fiscal year came from Canada.
Trudeau said Canada had nonetheless stepped up its drug enforcement efforts, resulting in a further drop of 97% in fentanyl seizures from Canada from December to January, to 0.03 pounds.
The tariffs on Canada and Mexico, which Trump issued in an executive order he signed Feb. 1, had been put on hold for 30 days after the leaders of both countries announced moves to tighten border security. They also include a 10% tariff on Canadian energy imports.
U.S. stocks tumbled Monday after Trump said the tariffs on Canada and Mexico would go ahead as planned, with the Dow Jones Industrial Average falling 650 points, or 1.48%, and the S&P 500 dropping 1.76% for its worst day so far this year.
In Asia, Japan led declines in markets around the region with stocks falling almost 2%, CNBC reported. Stocks in mainland China and Hong Kong were muted.
Chinese leaders and lawmakers gather in Beijing this week for the country’s biggest political event of the year, the National People’s Congress, where the ruling Chinese Communist Party will signal its priorities and goals for the year, including its approach to the Trump administration.
Though China spared U.S. agriculture in its response to the first 10% tariff, “Trump’s impatient tariff offensive may be changing the calculus” and the U.S. farming sector “should start to feel the pinch,” said Tianchen Xu, senior economist at the Economist Intelligence Unit in Beijing.
“Sounds like it’s telling the U.S. that ‘we’re really going to hit you hard if you don’t stop,’” he said in an email.
In Canada, meanwhile, retaliation against U.S. tariffs could also extend to its individual provinces. Ontario Premier Doug Ford said Monday on NBC’s “Meet the Press NOW” that Canada would “respond like they’ve never seen before.”
He said he was prepared to retaliate by cutting off the transmission of electricity from his province to the United States, as well as shipments of nickel, which “will shut down manufacturing because 50% of the nickel you use is coming out of Ontario.”
“I’m sorry to the American people that your president has decided to do this,” Ford said. “I apologize, but he’s giving us no choice.”