Canada’s Trade Wars: Escalating Tariffs with the U.S. and China Reshape Economy and Politics

As of March 15, 2025, Canada is engaged in escalating trade tensions with both the United States and China, leading to significant economic and political developments.

Trade Dispute with the United States

On March 12, 2025, U.S. President Donald Trump imposed an additional 25% tariff on Canadian steel and aluminum imports, increasing the total tariff to 50%. This action was in retaliation to Ontario Premier Doug Ford’s 25% surcharge on electricity exports to U.S. states Michigan, Minnesota, and New York. Ford’s surcharge, implemented to counter U.S. tariff threats, affects approximately 1.5 million U.S. households and businesses, generating an estimated $278,000 daily.

In response, the Canadian government announced 25% tariffs on nearly C$30 billion worth of U.S. products, effective March 13, 2025. These measures target various U.S. goods, including liquor, vegetables, clothing, shoes, and perfume. The retaliation aims to pressure the U.S. administration to reconsider its trade policies.

The escalating tariffs have led to a surge in Canadian nationalism, with consumers increasingly boycotting U.S. products and choosing Canadian-made goods. Grocery chains like Sobeys Inc. and Metro Inc. are promoting local products, further reducing sales of U.S. items. This consumer shift is impacting American businesses that export to Canada.

Political Implications in Canada

The trade tensions have significantly influenced Canadian politics. Following Prime Minister Justin Trudeau’s resignation, Mark Carney was appointed as the new leader of the Liberal Party. Carney intends to maintain retaliatory tariffs on U.S. goods until the U.S. recommits to free trade. Conservative leader Pierre Poilievre advocates for even stronger tariffs in response to U.S. measures. Analysts suggest that regardless of the new leadership, immediate improvement in U.S.-Canada relations under President Trump is unlikely.

The upcoming federal election has seen a shift in voter priorities, with many Canadians uniting against Trump’s influence. This shift has bolstered the center-left Liberals, narrowing the gap with the Conservatives, as voters seek candidates who oppose U.S. trade policies.

Trade Dispute with China

Canada is also involved in a trade dispute with China, which began in late 2024. In October 2024, Canada imposed a 100% tariff on Chinese electric vehicles and a 25% tariff on Chinese steel and aluminum products, citing concerns about market distortion and unfair competition due to Chinese government subsidies. In retaliation, China announced tariffs on several Canadian agricultural exports, including a 100% tariff on rapeseed oil, peas, and oilcakes, and a 25% tariff on aquatic products and pork, effective March 20, 2025.

These concurrent trade disputes are reshaping Canada’s economic landscape, prompting efforts to diversify trade partnerships and reduce reliance on U.S. and Chinese markets.

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