OTTAWA — U.S. President Donald Trump threatened to escalate the trade war he launched with Canada even further on Tuesday, just hours after imposing his first round of punishing import taxes on all Canadian goods.
Prime Minister Justin Trudeau called Trump's imposition of a 10 per cent tariff on Canadian energy and 25 per cent tariffs on all other goods "dumb" and said Canada is fighting back.
"Now, it's not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do," Trudeau said at an Ottawa press conference, addressing Trump directly by his first name.
He said Canada is immediately introducing 25 per cent retaliatory tariffs on $30 billion worth of American products, and will expand them to cover another $125 billion in U.S. goods in 21 days.
Trump responded in a post on Truth Social, the social media platform he owns, by threatening to introduce even more tariffs on Canada.
"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!" Trump wrote, citing his repeated claim that Canada would be better off if it becomes a U.S. state.
The tariffs were framed initially as a U.S. response to fentanyl trafficking and border security. Trudeau said that Canadian efforts on border security have been "well received" by American officials and Trump has lost his legal pretext for starting an "unjustified" trade war.
"The one thing (Trump) has said repeatedly, that what he wants is to see a total collapse of the Canadian economy, because that will make it easier to annex us," Trudeau said, adding Canada will never become a U.S. state.
"But he is rapidly going to find out, as American families are going to find out, that that's going to hurt people on both sides of the border."
In an earlier post on Truth Social on Tuesday, Trump said if companies move to the U.S., they won't face the tariffs.
Trudeau said that opponents like Russia want to see normally friendly nations fighting each other.
"So today, the United States launched a trade war against Canada, their closest partner and ally, the closest friend," he said.
"At the same time, they're talking about working positively with Russia, appeasing (Russian President) Vladimir Putin, a lying, murderous dictator. Make that make sense."
Trudeau said the federal government will support Canadians through measures like enhancing employment insurance "no matter the cost." He did not announce specific measures to protect weakened Canadian businesses from potential takeovers.
Canada will also file claims against the tariffs with the World Trade Organization and through the Canada-U.S.-Mexico Free Trade Agreement.
The U.S. tariffs took effect at 12:01 a.m. ET., rattling stock markets on both sides of the border.
The S&P/TSX composite index — Canada's benchmark stock index — took a sharp hit, closing down 429.57 points at 24,572.
Major indices in the U.S. faced a rollercoaster, with the Dow Jones industrial average down roughly 670 points and the Nasdaq composite also suffering steep losses despite rebounds by big tech stocks.
As of Tuesday, all gains seen on the S&P 500 since election day in the U.S. were wiped out.
Commerce Secretary Howard Lutnick spread more confusion late Tuesday when he suggested Trump may change the tariffs on Canada and Mexico on Wednesday.
"I think (Trump's) going to work something out with them — it's not going to be a pause, none of that pause stuff — but I think he's going to figure out, 'You do more and I'll meet you in the middle' some way, and we're going to be probably announcing that tomorrow," Lutnick told Fox Business.
It remained unclear what Trump was considering.
Trump also has said he plans to implement 25 per cent tariffs on all steel and aluminum imports coming into the U.S. on March 12. These duties would be imposed on top of any existing tariffs.
Trudeau met with the premiers Tuesday afternoon to talk about non-tariff responses.
Quebec Premier François Legault said his province will impose penalties on U.S. companies that bid on provincial government contracts, while Ontario Premier Doug Ford is banning American companies from bidding on provincial contracts altogether.
Ford also said he is imposing 25 per cent export tariffs on electricity the province ships to the United States, and will cut off those exports altogether if Trump's tariffs remain in place into April.
"I've spoken to governors, senators, congressmen and women from every region, both Democrats and Republicans. They know, they tell me these tariffs are a massive mistake," Ford said Tuesday.
Quebec, Ontario, New Brunswick and Manitoba are removing American products from provincial liquor store shelves.
Alberta Premier Danielle Smith said in a social media post that she supports the federal government's approach and will have more to say Wednesday after meeting with her cabinet Tuesday.
Smith did not sign a joint statement on tariffs coming out of a meeting between Trudeau and the premiers on Jan. 15. She broke ranks with her fellow premiers by dismissing talk of retaliation, including a counter-tariff on Alberta's oil and gas shipments.
Trudeau said the pain from potential non-tariff measures must be shared equally across Canada.
Canadian officials and premiers made a month-long diplomatic push in Washington after Trump signed the original executive order, which tied the duties to the illegal flow of people and drugs across the northern border.
U.S. Customs and Border Protection data shows the volume of people and drugs crossing illegally into the United States from Canada is tiny compared to the volume coming across the southern border. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.
Conservative Leader Pierre Poilievre said the federal government should have been doing more to fight fentanyl trafficking and secure the border without pressure from Trump.
He added that the government should treat counter-tariffs as a means to reduce taxes.
"The obvious place to start is to get rid of the Liberal carbon tax, then axe the sales tax on new homes. We need to reverse the Liberal capital gains tax hike and slash income tax so that hard work pays off," Poilievre said.
He said Canada should fast-track pipeline projects to get natural resources like liquefied natural gas to non-American markets and remove "all red tape" on homebuilding to boost Canadian softwood lumber demand.
NDP Leader Jagmeet Singh said he wants Parliament recalled to pass emergency supports for workers, even if it means delaying an anticipated federal election.
At a press conference in Ottawa, Singh said he wants to see permanent revisions to employment insurance, warning the economic hit from these tariffs could be worse than the effect of the COVID-19 pandemic.
"Now is the time to put workers first. We're literally in a trade war and I can't imagine any opposition leader that wouldn't want to support a package to help workers impacted by this," Singh said.
"We need support for workers first ... and an election afterwards."
The House of Commons is scheduled to reconvene on March 24 and the Liberals will select a new leader on Sunday.
The perceived frontrunner for the Liberal leadership, former central banker Mark Carney, has not ruled out calling a snap election but has said it would depend on the tariff situation.
The tariffs and Trump's talk of annexation have driven a rise in patriotism across the country, with people putting together "buy Canadian" lists and boycotting American goods, and sports fans booing the Star Spangled Banner.
Shortly after Trudeau's address, Canadian hockey great Haley Wickenheiser shared a photo of herself on Facebook holding the Maple Leaf at the 2014 Sochi Winter Olympics after the women's hockey team won gold for Canada in a comeback over the Americans.
Trudeau on Tuesday encouraged Canadians to remain patriotic and stick together. "This is the time to redouble your efforts," he said. "Canada remains the best country in the world."
— With files from Kelly Geraldine Malone in Washington, Lauren Krugel in Calgary, Catherine Morrison and Craig Wong in Ottawa and The Associated Press.
This report by The Canadian Press was first published March 4, 2025.
David Baxter, The Canadian Press
