Since taking office, U.S. President Donald Trump has been outspoken about his intent to impose sweeping tariffs on Canada and other global trading partners. In a move that stunned many Canadians, these threats materialized on March 4, 2025, with the implementation of a 10% tariff on all Canadian energy imports and a blanket 25% tariff on all other Canadian goods entering the United States. These measures were introduced alongside a 25% tariff on Mexican imports and an additional 10% tariff on Chinese goods, marking a significant escalation in global trade tensions.

Canada responded swiftly by announcing retaliatory measures, including 25% retaliatory tariffs on a sweeping list of strategically selected American goods. Both the U.S. tariffs, and Canada’s first round of retaliatory countermeasures took effect on March 4, 2025, at 12:01 am. with significant implications for key industries, including agriculture, automotive, and technology sectors, likely causing ripple effects across supply chains and cross-border operations.

U.S. tariffs

The United States has imposed 25% tariffs on all products of Canada and a 10% tariff specifically targeting imports of Canadian energy products.

Energy products subject to the lower 10% tariff rate are defined by reference to Executive Order 14156 (January 20th) to include "crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals, as defined by 30 U.S.C. 1606 (a)(3)."

No exemptions or product exclusion process has been included in the Executive Order imposing the tariffs. While the Executive Order was originally slated to revoke the ability of goods from Canada to obtain duty free de minimis treatment for imports under $800, amendments to the Executive Order made on March 2 delay the suspension of de minimis treatment until “notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expeditiously process and collect tariff revenue.”

The U.S. tariff order includes provisions allowing for further tariff increases on Canadian imports if retaliatory measures are imposed.

Canadian retaliatory response

Joined by Minster of Finance Dominic LeBlanc, Minister of Foreign Affairs Mélanie Joly and Minister of Public Safety David McGuinty, Prime Minister Trudeau held a press conference to address Canada’s response to President Trump’s tariffs.  The Prime Minister vowed that “Canada will not let this unjustified decision go unanswered,” and announced retaliatory tariffs on $155 billion worth of American products.

In accordance with the United States Surtax Order (2025-1):

  • The first stage imposed 25% tariffs on $30 billion of U.S. imports effective March 4, 2025, at 12:01 a.m. EST.
  • A second round of tariffs affecting an additional $125 billion of U.S. imports will be imposed on March 25, 2025, following a 21-day comment period.

In addition to the counter-tariffs, Ottawa will also file dispute resolution claims at the World Trade Organization and through the United States-Mexico-Canada Agreement (USMCA) for these “illegal actions”. The Prime Minister said there was “absolutely no justification” for the U.S. tariffs, arguing that Canada has delivered on its promises to strengthen border security, including a $1.3 billion border plan and the appointment of a new fentanyl czar.

In response to media questions, Prime Minister Trudeau acknowledged that Trump has repeatedly cited the flow of fentanyl as the legal reason for imposing tariffs on Canada and Mexico. Trudeau said that excuse was “completely bogus, completely unjustified, and completely false.”  “President Trump wants to see a total collapse of the Canada economy, and this will make it easier to annex us. That’s “never going to happen,” he said.

The Prime Minister stated that Canada’s “tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures. While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal.”

First round of goods affected

The first round of Canadian tariffs imposed by Ottawa target a wide array of American goods, including:

  • Agricultural products: Live poultry (fowls, ducks, turkeys), poultry meat (fresh, chilled, frozen), offal
  • Dairy & food products: Cheese, yogurt, processed meats, canned vegetables, and baked goods
  • Alcohol & beverages: Whiskey, bourbon, wine, beer, and non-alcoholic beverages
  • Machinery, appliances & equipment: Mechanical and household appliances, and parts
  • Automotive: Vehicle engines, transmissions, parts, and accessories
  • Consumer goods: Furniture, mattresses, household appliances, apparel, and footwear
  • Plastic & rubber products: Packaging materials, plastic sheets, tires
  • Wood & paper products: Lumber, plywood, paper, and cardboard
  • Jewelry & precious metals: Gold, silver, jewelry items, and coins
  • Tools & hardware: Hand tools, fasteners, locks, and metal fittings

The full list of affected products is extensive and is available on the Department of Finance's website.

Second round of goods affected

The second round of tariffs will target further American goods in the categories above and beyond, including in particular:

  • Aerospace, vehicles & boats: Including aerospace products, passenger vehicles and trucks, including electric vehicles, heavy trucks, buses, recreational vehicles, and recreational boats.
  • Machinery, appliances & equipment: Agricultural machinery, industrial machines, mechanical appliances, and parts
  • Iron & steel products: Pipes, tubes, sheets, wire, and structural components
  • Aluminum products: Raw aluminum, foil, sheets, and bars
  • Construction materials: Stone, plaster, cement, pipes and pipe fittings of various materials
  • Wood and paper goods: Additional products of the lumber and paper industries
  • Agricultural & food products: Further livestock, beef, pork, and dairy; certain fruits, vegetables, and plant products; fish and seafood; bread and baked goods
  • Chemical products: Industrial chemicals, fertilizers, and cleaning agents
  • Textiles & fabrics: Cotton fabrics, synthetic fibers, carpeting and textile products
  • Glass & ceramic products: Glassware, ceramic tiles, and sanitary fixtures
  • Medical & scientific equipment: Instruments, devices, and lab equipment
  • Electronics & electrical components: Cables, transformers, household electronics
  • Recreational products: Sporting goods, musical instruments, and games

The full list of products under consideration for the second round of tariffs is available in the Department of Finance's Notice of Intent to Impose Countermeasures in Response to United States Tariffs on Canadian Goods. The government is seeking views from business, stakeholders, and Canadians regarding the impacts of the application of tariffs to the goods listed in Table 1 of the Notice until March 25, 2025.

Input on tariff measures can be provided by completing this form, and any additional views or comments regarding Canada's tariff response can be submitted via e-mail to consultations@fin.gc.ca, with "U.S. Tariff Consultations" in the subject line. 

Remission requests

The Department of Finance has introduced a formal process for requesting tariff remission on certain goods imported from the United States. Remission may be granted on a discretionary basis, in response to exceptional and compelling circumstances that, from a public policy perspective, are found to outweigh the primary rationale behind the application of the tariffs.

Canadian-registered companies may apply under two specific circumstances:

  • To address situations where goods used as inputs cannot be sourced domestically, either on a national or regional basis, or reasonably from non-U.S. sources.
  • To address, on a case-by-case basis, other exceptional circumstances that could have severe adverse impacts on the Canadian economy.

Inquiries or remission requests must be submitted to remissions-remises@fin.gc.ca, including “U.S. Remission” in the subject line, and contain the information set out in the Department of Finance’s template.

Non-tariff measures

Canada’s federal government is also considering additional non-tariff measures in collaboration with provinces and territories, potentially affecting critical minerals, energy, procurement, and other partnerships. The following measures have been announced by provincial premiers thus-far, with other provinces expected to announce similar measures in the coming days:

  • Halting sales of American alcohol: Ontario, Nova Scotia, Newfoundland and Labrador, New Brunswick, Manitoba have announced that they will pull American alcohol from the shelves of their provincial stores.
  • Procurement restrictions: U.S.-based companies have been banned from taking part in Ontario government procurement, with the Ontario government also terminating an agreement with Starlink. Nova Scotia will also limit American businesses’ ability to participate in provincial government procurement, and explore the cancelation of existing contracts and bids. Quebec will also impose penalties on U.S. companies that bid on provincial government contracts.
  • Investments in internal trade and diversification: Manitoba and New Brunswick have both announced fiscal policy measures intended to support businesses impacted by the tariffs, with Alberta also announcing that it was exploring options to offer government support for projects that would facilitate domestic and diversified trade.
  • Export restrictions: Ontario’s premier Doug Ford has stated that he will be imposing a 25% surcharge on electricity exports to the U.S., and that he will cut off those exports altogether if the U.S. tariffs remain in place into April. Export restrictions on nickel to the U.S are also being explored.
  • Transport Restrictions: The Nova Scotia government has doubled tolls on U.S commercial vehicles using the Cobequid Pass connecting Nova Scotia and New Brunswick.

Strengthening and removing barriers to internal trade has also been highlighted as a shared priority for Canadian federal, provincial, and territorial leaders, who convened on January 31, 2025 at a Committee on Internal Trade (CIT) meeting to discuss measures aimed at bolstering the domestic economy. The Honourable Anita Anand, Minister of Transport and Internal Trade, announced initiatives to eliminate regulatory barriers to internal trade, enhance labour mobility, and standardize regulations across Canada. Key actions include:

  • Mutual recognition of goods and services: A good or service sold in one jurisdiction can be sold in another without additional regulatory requirements.
  • Improved labour mobility: Registered workers will be able to operate across provinces and territories without delays.
  • Enhancements to the Canadian Free Trade Agreement: Reducing exceptions and addressing sectoral priorities to streamline internal trade.

At subsequent CIT meetings, CIT ministers have committed to continuing to move these initiatives forward swiftly and effectively and engage Canadian stakeholders in support of these efforts. These actions are expected to lower prices, boost productivity, and create new market opportunities for Canadian businesses, helping to offset the impact of U.S. tariffs and strengthen Canada's economic resilience.

Immediate impacts

In his remarks, the Prime Minister did not sugarcoat the negative impact on Canada.  He said, “this is going to be tough.”  Regarding relief measures, the Prime Minister did not provide specifics.  He said that the government “would use every tool at its disposal” to help Canadian workers and businesses deal with the impact of the trade war. This includes looking at changes to Employment Insurance, he said.

Analysts and economists are worried that sustained tariffs could push Canada into a recession, with job losses expected across multiple sectors, mainly sectors with a heavy reliance on exports to the U.S. as well as the auto sector, construction sector, energy sector, agriculture, and consumer goods.  A recent report by the Canadian Chamber of Commerce said approximately 2.3 million Canadians work in jobs tied directly to U.S. exports, while 1.4 million Americans work in jobs tied to Canadian exports. Fifty per cent of bilateral goods trade between related companies, underscoring the depth of integration between the Canada-U.S economies. Cross-border trade sustains millions of jobs, businesses, and communities across North America.

Addressing Trump directly, Trudeau said: “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.”  In response, President Trump is threatening to escalate the trade war.  Already prepared to make matters worse, in a recent post on X, President Trump said, “Please explain to Governor Trudeau, of Canada, that when he puts a Retaliatory Tariff on the U.S., our Reciprocal Tariff will immediately increase by like amount.”

Conservative Party Leader Pierre Poilievre said, “President Trump stabbed America’s best friend in the back when he imposed these tariffs.” While supporting dollar for dollar tariff reductions and reduced international trade barriers, Mr. Poilievre added that the government should treat counter-tariffs 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,” Mr. Poilievre said. He added that Canada should fast-track pipeline projects to get natural resources like liquefied natural gas to non-American markets and remove “all red tape” on home building to boost Canadian softwood lumber demand.

The Prime Minister, Leader of the Opposition Pierre Poilievre, and provincial Premiers have all emphasized the negative impacts of tariffs on Americans.  Americans will pay more for groceries, gas, and cars, and potentially lose thousands of jobs. All made it clear that these tariffs will disrupt an incredibly successful trading relationship.

Meanwhile, Canada is bracing for two more rounds of tariffs threatened by the Trump administration, including additional 25 per cent duties on all steel and aluminium imports coming to the U.S., including from Canada, set to go into effect March 12. On April 2, Trump is also planning to impose global reciprocal tariffs on all of America’s trading partners, including Canada.

The stock markets on both sides of the border have been hit hard and have reacted negatively to the tariffs imposed. Warren Buffett has commented that this is a war declared against Canada by President Trump. Broadcasters both left and right in the U.S. have played out their various views on the reasons for the deliberate and unprovoked tariff war on Canada. Mexico’s President, Claudia Sheinbaum, has indicated that her government will also announce retaliatory measures; likely with initial tariffs as Canada has reacted today.

No doubt, the coming days will be focussed on reaction to these tariffs and efforts by officials to parse out the next steps. Meanwhile, businesses will be obliged to identify their strategy to survive the ordeal by seeking out new export markets, more focus on internal trade and seeking ways to move certain manufacturing across the border. Pivoting business investments will be considered and seeking new partners and government support in certain sectors will also be among the options for consideration.

Strategic considerations

While the U.S. tariffs on Canadian goods promise to significantly impact organizations importing goods into the United States, Canada’s expected retaliatory response will be no less consequential for organizations exporting goods from the U.S. into Canada. It’s imperative that both Canadian and American organizations engaged in cross-border trade assess the potential impacts of the measures imposed on both sides of the border, and review their business continuity strategies.

We encourage you to review our guides, which provide further details on the structure of Canada’s retaliatory tariff measures, and set out the most relevant strategic considerations and actions for impacted parties:

Our International Trade & Customs and Government Affairs teams are closely monitoring this situation and are available to advise on specific impacts to your business. For further information or assistance, please contact us directly.