US President Donald Trump’s objective is to destroy Canada’s economy so he can annex the country, Prime Minister Justin Trudeau said during a fiery news conference about the start of a trade war between the countries.
Trump put the tariffs in place on Tuesday, saying Canada and Mexico have not done enough to crack down on drug trafficking. But in Canada’s case, that’s just a pretext for tariffs the US president planned to impose anyway, Trudeau said.
“The excuse that he’s giving for these tariffs today of fentanyl is completely bogus, completely unjustified, completely false,” Trudeau said. “What he wants is to see a total collapse of the Canadian economy because that’ll make it easier to annex us.”
Trump has repeatedly said that Canada can avoid tariffs if it becomes the 51st US state. Canadian officials initially dismissed the remark as a joke, but it took on a more menacing tone in January when Trump pledged to use “economic force” to overtake the country. Trudeau told a group of business leaders last month that he believes the threat is real.
The president slapped 10% tariffs on Canadian energy products and 25% duties on everything else the country buys from Canada and Mexico. Trudeau’s government hit back with levies targeting C$30 billion ($20.8 billion) in American products including cosmetics, appliances, tires, fruit and wine.
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If Trump’s levies stay in place, Canada’s tariffs will be expanded in three weeks to a broader range of goods worth C$155 billion in annual imports from US producers. The second phase will hit American-made vehicles as well as aluminum and aerospace products.
In addition to these tariffs, Trudeau said his government will file dispute resolution claims at the World Trade Organization and through the free trade agreement between the US, Mexico and Canada. Both federal and provincial governments are also in discussions to pursue non-tariff measures that will demonstrate that “there are no winners in a trade war,” he said.
Canada’s economy is heavily reliant on the ability to sell goods and resources to the US, and many of its businesses and consumers also depend on American-made imports from machinery to food. If the tariffs remain in place, the country appears certain to fall into recession, with economists seeing as much as a 4 percentage-point hit to gross domestic product.
The trade war comes at a politically challenging time in Canada. Trudeau will step down soon after his Liberal Party elects a new leader to replace him on Sunday. A general election is also expected in the months ahead. The Parliament is currently suspended but some business leaders and politicians — including New Democratic Party Leader Jagmeet Singh — are now pushing for an emergency session to pass relief measures for businesses and workers.
“Political and policy uncertainty is the last thing the country needs at this moment,” said Dan Kelly, president of the Canadian Federation of Independent Business.
Amid the parliamentary vacuum, provincial government leaders have stepped up to craft their own response to US tariffs. Ontario Premier Doug Ford threatened a 25% export tax on electricity exports to the US. The province is also pulling US alcohol off the shelves at government-owned liquor stores.
‘Forever Changed’
The first phase of tariffs are about spurring more actions to stop of the illicit flow of fentanyl and are “not a trade war,” US Commerce Secretary Howard Lutnick said Tuesday on CNBC. Canada will face another phase of tariffs on April 2 when the Trump administration will “reset trade policy,” Lutnick said.
Trudeau’s government has unveiled a C$1.3 billion border security plan to increase aerial surveillance and personnel at the crossing, even though less than 1% of the fentanyl seized by US border agents was captured at or near the Canadian border. “There is no justification or need whatsoever for these tariffs today,” Trudeau said.
Unions in the US and Canada said the tariffs will hurt both economies.
“Canadian and American workers are not in competition — we build goods together,” said United Steelworkers International President David McCall. “These tariffs will hurt manufacturing, drive up costs and kill jobs on both sides of the border.”
Unifor President Lana Payne agreed, saying Trump “has misjudged how damaging this trade war will be for American workers.” She called on Canadians to build a more resilient economy.
In his briefing on Tuesday, Trudeau spoke directly to Americans.
“Your government has chosen to put American jobs at risk,” he said. “They’ve chosen to raise costs for American consumers on everyday essential items like groceries and gas, on major purchases like cars and homes and everything in between.”
He also had a message for Trump: “This is a very dumb thing to do.” – Bloomberg
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