Canada–U.S. Trade War & Tariffs

 Escalation of Tariffs:

• In January 2025, President Donald Trump imposed 25% tariffs on all Canadian goods
  
  
• This prompted Canada to announce dollar-for-dollar counter-tariffs on about $30 billion of US goods. ​We began with targeting goods either exclusively or primarily produced and shipped from "red (Republican-run) states", including dairy products, orange juice, most fruit, coffee and alcohol¹.
  
  
• This back and forth continues to ebb and flow – as of now we have 25% retaliatory tariffs on all goods that are not CUSMA (USMCA) compliant, including vehicles imported from the US that aren’t under CUSMA. 
  
  
  
  
  
  
• Almost immediately following the announcement of the US tariffs, Canadian media embarked on a consistent fact-checking campaign. This was aimed at all politicians, but corrections were primarily levied against Donald Trump and Pierre Poilievre (the Canadian Conservative leader) due to consistent misinformation and disinformation in their press conferences.
  
  
• Examples:

"We subsidize a lot of countries and keep them going and keep them in business," Trump said. "In the case of Mexico, it's $300 billion. In the case of Canada, it's close to $200 billion a year." 

• According to the Office of the United States Trade Representative, The U.S. goods trade deficit with Canada was $63.3 billion in 2024, down from $64 billion in 2023² 

• According to US census data, in February 2025 Canada was eighth on the list of countries with the highest trade deficits with the US, below China, Switzerland, Mexico, Ireland, Vietnam, Taiwan and Germany³. 

• This is largely due to the population disparity between the US and Canada – the US has 8.3x more people than Canada does, and to expect dollar-for-dollar trade rates with the US is irresponsible. 

• Trump also claimed Canada imposes a "250 to 300 per cent tariff on many of our dairy products. They do the first can of milk, the first carton of milk at a very low price but after that it gets bad." 

• Those high tariffs on U.S. dairy only apply if exports exceed set quotas. Below the quotas, the U.S. dairy products enter tariff-free because of the Canada-United States-Mexico Agreement (CUSMA), according to the U.S. Department of Agriculture.  

• According to the International Dairy Foods Association, the U.S. has never come close to exceeding its quotas.² 

• There is question as to how legal the tariffs placed on Canada are, especially on the goods and services which were previously covered by free trade agreements. As a result this situation is frequently referred to as an “economic war”, and the Canadian governments are structuring themselves as if a war-like conflict against our country was in place.

Provincial Responses:

• Several Canadian provinces and territories have removed U.S. alcohol from their liquor stores in response to American tariffs. Most, if not all, provinces have also agreed to work with each other and with the Federal government to reduce or eliminate interprovincial trade barriers which would facilitate the flow of goods and services
  
  
• Ontario banned $30 billion worth of procurement contracts to the US and ripped up a $100-million Starlink deal in the wake of both the tariffs and backlash from Elon Musk’s Nazi salute. Initially, Ontario had levied a 25% surcharge on its electricity exports, affecting approximately 1.5 million homes in Minnesota, Michigan and New York⁴, but this was walked back when Trump paused tariffs initially. Ford has said this surcharge, as well as cutting off supply entirely, is still on the table should tariffs be increased.
  
  
• Similarly, Quebec has threatened to cut off their electricity exports to the US as a result of increased tariffs. The province is currently party to 2 multibillion-dollar power contracts with Massachusetts and New York for transmission projects slated to come online over the next 15 months⁵
  
  
• Nova Scotia has begun cancelling existing procurement and service contracts with American companies and doubled the tolls for American commercial vehicles travelling the Cobequid Pass (a northern highway that connects the province with New Brunswick)⁶

Economic Repercussions:

• The trade tensions have strained Canada's economy, with industries like agriculture and manufacturing facing challenges due to reduced access to the U.S. market.
  
  
• The United Steelworkers Union argues that tariffs on Canada are damaging to both economies. Canada and the U.S. trade $1.3 trillion annually, and disrupting this hurts workers and economies on both sides
  
  
• Due to the sudden uncertainty around trade relations, businesses on both sides of the border could delay investments, further slowing GDP growth⁷.
  
  
• A good portion of Canadian exports that are critical to both the US and Canadian economies are minerals, particularly critical minerals and metals such as uranium (for power plants and military use), cesium (used for atomic clocks and radiation therapy for cancer), phosphorous and potash (both used in fertilizer, among other things). Slowing or completely barring trade to the US for these items will impact Canada harshly in the short run. Although we have buyers willing to step up, it takes time and resources to reroute trade.
  
  
  
  
  
• BDC Capital (the Business Development Bank of Canada) estimates that if tariffs remain at current levels the Canadian GDP could shrink by 1% over the course of 2025. This is driven by the decline of the US economy, less consumer and business spending and less investment by corporations in the Canadian economy⁸.
  
  

• The issue Canadians face is that so much of our economy is tied to the US whether directly or indirectly, and when we have infighting (such as the cons wanting to keep / raise tariffs to fund their plans as opposed to trying to resolve the trade war) separating more fully from the US is impossible⁹.
  
  

• Our dollar normally goes up when the US falls, however because the US is affecting the entire world we are experiencing similar albeit less of a drop.
  
  

• As of today, the economic forecast does not point to a true recession in Canada, but the Canadian economy will undoubtedly slow as trade barriers remain uncertain¹⁰.
  
  

• This is subject to change based on the actions of the new Liberal government following Canada's federal election on April 28. 

Impact on Canadian Consumers:

• Tariffs have led to higher prices for everyday goods, including food and household items, affecting Canadian households. ​Some industries, such as steel, aluminum, packaging and automotive, are facing major layoffs without government assistance.
  
  

• Aside from goods listed under CUSMA (USMCA), these industries face heavily tariffed products. This prompted Flavio Volpe, head of Canada's auto-parts lobby, to write:

“The. Auto. Tariff. Package. Will. Shut. Down. The. Auto. Sector. In. The. USA. And. In. Canada. Don't be distracted. 25% tariffs are 4 times the 6/7% profit margins of all the companies. Math, not art."¹¹

• When it comes to energy, approximately 77% of Canadians polled supported levying higher tariffs on the US when it comes to potash, critical minerals, oil, gas and electricity¹².
  
  
• A large grassroots movement to “buy Canadian”, including educational social media posts and news bites on the difference between “Made in Canada” and “Product of Canada” began to build steam, and a nation-wide boycott of as many American goods and services as possible effectively spread to other countries such as the UK, Denmark and Sweden. This boycott has been publicly supported by political leaders Justin Trudeau and Jagmeet Singh as well as by many Americans seeking to buy Canadian in solidarity¹³.
  
  
• In February, polling showed 91% of Canadians want Canada to rely less on the US as opposed to trying to repair the relationship with the US¹⁴. Approximately 56% of those polled were either planning to cancel their leisure trips to the US or had done so already – a move done out of both support for Canadian tourism as well as concern for their safety in the US given escalating xenophobia and border inspections¹⁵.
  
  

• This trade war has also highlighted the importance of national unity to Canadians. Quebec, traditionally a province with deep separatist roots that sees themselves as fundamentally different from the rest of Canada, was one of the first to step up in solidarity and encouraged a “Canada First” system of leadership moving forward in the face of economic warfare with America¹⁶.

  • The Albertan government has been incredibly resistant to the notion of Canada First leadership, largely due to their reliance on oil and gas exports to the US for refining. While the US imposed 10% on O&G imports from Canada, AB leader Danielle Smith continues to fight against retaliatory tariffs and took several trips to the US (including visits to Mar-a-Lago and an event with Ben Shapiro) in an attempt to have them removed from just her province¹⁷.
    

Sources

1https://www.canada.ca/en/department-finance/news/2025/03/canada-announces-robust-tariff-package-in-response-to-unjustified-us-tariffs.html

2https://www.cbc.ca/news/politics/fact-checking-donald-trump-s-claims-about-canada-in-his-global-tariff-speech-1.7500989

3https://www.census.gov/foreign-trade/statistics/highlights/topcm.html

4https://www.cbc.ca/news/canada/toronto/ontario-electricity-surcharge-us-tariffs-ford-1.7476515

5https://www.theglobeandmail.com/business/article-quebec-considering-stopping-us-electricity-exports-to-northeast-spot/

6https://chatnewstoday.ca/2025/03/04/provinces-tariff-tuesday-reaction/

7https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/canadas-response-us-tariffs.html

8https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/publications/monthly-economic-letter/2503

9https://www.cbc.ca/news/world/tariffs-global-economy-1.7515591

10https://thoughtleadership.rbc.com/preparing-for-the-downside-could-federal-finances-withstand-a-trade-war/

11https://www.cbc.ca/news/world/trump-liberation-day-analysis-1.7500598

12https://www.ctvnews.ca/federal-election-2025/article/three-quarters-of-canadians-favour-using-tariffs-on-energy-and-critical-minerals-in-trade-war-with-us-survey/

13https://www.cbc.ca/news/politics/trump-tariffs-canada-february-1-1.7447829

14https://www.bbc.com/news/articles/c0qw9y94w2vo

15https://abacusdata.ca/canadians-plan-to-avoid-the-u-s-amid-political-tensions/

16https://youtu.be/8qBU2P0yomI?si=VZJ_GF6mzWCPWU4P

17https://www.ctvnews.ca/business/article/alberta-pauses-some-of-its-fight-back-plan-against-the-us-amid-tariff-dispute/

Canada and the War in Palestine

• Conflict between Israel and Palestine has been ongoing for 77 years (as of 2025)
  
  
• On May 14, 1948, the State of Israel was created, sparking the first Arab-Israeli War. The war ended in 1949 with Israel’s victory, but 750,000 Palestinians were displaced, and the territory was divided into 3 parts: the State of Israel, the West Bank (of the Jordan River), and the Gaza Strip.
  
  
• Since 2007, the Gaza Strip has been governed by Hamas, an Islamist militant group, while the West Bank remained under the control of the Fatah-led Palestinian Authority.
  
  
• Since 2007, Israel and Hamas, along with other Palestinian militant groups based in Gaza, have been constantly engaged in conflict.
  
  
• Four major wars erupted in 2008, 2012, 2014, and 2021.

 

Canada's Position: 

•  Canada has called for an immediate ceasefire and increased humanitarian aid to Gaza, emphasizing the need for a two-state solution.​

  In November 2024, Prime Minister Justin Trudeau said Canada will “abide” by an International Criminal Court (ICC) arrest warrant for Israeli Prime Minister Benjamin Netanyahu. ¹
  
  

• Canada’s official statements declare:
  
  

• $215 million in international assistance funding to address urgent needs stemming from the crisis in the Gaza Strip, the West Bank, Israel and neighbouring areas. 
  
  

• This investment would be delivered through “experienced and trusted UN, Red Cross and NGO partners”²
  
  

• This will help provide food, water, emergency medical assistance, protection services and other life-saving assistance.
  
  

• Canada is also providing funding to the United Nations Office for Project Support to implement UN Security Council Resolution 2720, the coordination mechanism for Gaza.
  
  

• Canada will ensure that no money goes into the hands of Hamas
  
  
• Canada continues to stand ready to support efforts toward a 2-state solution, where Israelis and Palestinians can live side-by-side in peace, security, and dignity³. 
  
  

• Canada recognizes:

• The Palestinian Authority (PA) as the governmental entity in the West Bank and Gaza. 
  
  
• The Palestine Liberation Organization (PLO) as the principal representative of the Palestinian people. 
  
  
• Canada is working with the government led by the Prime Minister of the Palestinian Authority in terms of much needed reforms.
  
  

• Israel's right to protect its citizens from terrorist attacks, including through the restriction of access to its territory, and by building a barrier on its own territory for security purposes.
  
  

• However, Canada opposes Israel's construction of the barrier inside the West Bank and East Jerusalem which are occupied territories.
  
  
• This construction is contrary to international law under the Fourth Geneva Convention.
  
  
• Canada not only opposes Israel's construction of a barrier extending into the occupied territories, but also expropriations and the demolition of houses and economic infrastructure carried out for this purpose. ⁴
  
  
• Canada does not recognize Israel's unilateral annexation of East Jerusalem. Canada does not recognize permanent Israeli control over territories occupied in 1967 (the Golan Heights, the West Bank, East Jerusalem and the Gaza Strip). 
  
  

• Following Trump’s unveiling of his plans for Gaza, Canada’s International Development Minister Ahmed Hussen, Justice Minister Arif Virani and NDP Leader Jagmeet Singh were among a dozen MPs who pushed back on Trump’s idea⁵.
  

  
  
• Hussen, Virani and seven other Liberal MPs released a statement calling Trump’s idea “preposterous and a complete violation of international law” and saying that “it amounts to ethnic cleansing.”
  
  
• Singh said that Trump’s comments “destabilize” the Middle East and threaten the ceasefire between Israel and Hamas. “Trump’s threats are utter madness. They violate every international law,” he wrote in a post on X.
  
  

• Canada is a State Party to the Arms Trade Treaty (ATT), which bars the transfer of weapons if there is a substantial risk that the recipient of those weapons could use them in violations of IHL – a threshold which has evidently been crossed in the case of Israel. Any further export – either directly or via the United States – of military goods that Israel could use in Gaza would therefore be a violation of Canada’s obligations under the ATT.
  
  

• However, as Canada has long been a major munitions supplier to the US DOD, there remains a significant risk that some of these Canadian-made weapon systems have been sent on to third parties, including Israel.
  
  
• In September 2024 a Canadian Crown corporation signed a contract to provide the US DOD with artillery propellants that were then supplied to Israel. This agreement was finalized while the intensive bombardment of Gaza continued, months before the signing of a ceasefire that ultimately collapsed in March 2025. ⁶

Domestic Reactions:

• During our ongoing federal election, activists and human rights organizations across Canada have formed the Vote Palestine campaign, and are pushing candidates to take a stand on Israel’s genocide in Gaza, which has claimed at least 51,000 lives. ⁷
  
  

• Hundreds of pro-Palestinian protesters gathered on Parliament Hill on April 19, 2025, accusing the federal government of backtracking on its pledge to halt arms transfers to Israel and urging politicians to make foreign policy a central issue in the election campaign⁸.
  
  

  
  
  

• It was endorsed by over 150 organizations, and attended by diverse groups from across the country, said the organizers in a news release.
  
  
• The morning before the protest, Conservative Leader Pierre Poilievre was in Ottawa on the campaign trail and was asked about pro-Palestinian demonstrations in general and the use of the word "genocide" by a Liberal incumbent MP. 
  
  
• Pierre Poilievre (Conservative) said some pro-Palestinian protests have made Jewish Canadians feel unsafe and that the Liberal party has encouraged division.
  

  "The Jewish community feels understandably under siege as these hate marches and antisemitic outbursts have become an unfortunate part of Canadian life," he told reporters. “These are not our Canadian values of empathy, of caring about each other, caring about our people. Our government support to this genocide is a burden.”

Sources

1https://www.ctvnews.ca/politics/article/trudeau-says-canada-would-abide-by-icc-arrest-warrant-for-israel-pm-netanyahu/
2https://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/response_conflict-reponse_conflits/crisis-crises/israel.aspx?lang=eng
3 https://www.canada.ca/en/global-affairs/news/2025/03/minister-joly-announces-assistance-for-people-in-gaza-and-west-bank.html
4https://www.international.gc.ca/world-monde/international_relations-relations_internationales/mena-moan/israeli-palestinian_policy-politique_israelo-palestinien.aspx?lang=eng
5https://halifax.citynews.ca/2025/02/06/mps-reject-trumps-idea-of-clearing-out-gaza-as-israeli-minister-points-to-canada/
6 https://www.ploughshares.ca/publications/canada-under-contract-to-supply-the-idf-with-artillery-propellant
7https://www.policyalternatives.ca/news-research/organizers-are-pushing-to-vote-palestine-in-canadas-federal-election/
8https://www.cbc.ca/news/canada/ottawa/pro-palestinian-protesters-call-out-canadian-arms-transfers-to-israel-1.7508969

International Affairs