Trump Threatens New Tariffs on Canada as Trade War Seems Imminent

What Happened?

President Donald Trump has warned that he may implement tariffs on Canadian dairy and lumber as both sides engage in a brewing trade war.

The decision comes not long after President Trump announced a one-month exemption on auto tariffs against Canada and Mexico.

In addition, Trump has eased measures on other Mexican products in compliance with the United States-Mexico-Canada Trade Agreement (USMCA).

Trump added the extended measure out of respect for Mexico President Claudia Sheinbaum as an accommodation until April 2.

But, once again, Trump has slightly reversed course concerning Canada amid political tension with Canadian Prime Minister Justin Trudeau.

Trump stated on Truth Social Wednesday that he spoke with Prime Minister Trudeau over the phone in a 'somewhat friendly manner.'

On Friday, Trump told reporters during an Oval Office address that 'Canada has been ripping us off for years on lumber and on dairy products.'

He cited Canada’s roughly 250% tariff on U.S. dairy exports and said America would match those tariffs dollar-for-dollar.

'They'll be met with the exact same tariffs unless they drop it, and ... we may do it as early as today, or we'll wait 'til Monday or Tuesday,' Trump added.

Why it Matters

Trump has pledged to implement reciprocal tariffs on all major U.S. trading partners, including allies, beginning April 2.

Canada's Trudeau reportedly said he expects the trade war to be ongoing 'for the foreseeable future.'

Tensions have risen after Trump has regularly referred to Trudeau as a 'governor' and even suggested that Canada could become a U.S. state.

Ontario Premier Doug Ford recently told reporters that he and Trudeau are on the same page with not compromising on tariffs.

Ford suggested Canada will not remove any of its retaliatory tariff measures unless all the U.S. tariffs are removed.

Economists predict that 25% tariffs on Canadian imports could push Canada into a recession.

However, Trump has vowed part of campaign promises to reduce the U.S. trade deficit, which hit a record high of $131.4 billion in January.

How it Affects You

China has implemented retaliatory measures on U.S. farm exports amid 20% tariffs imposed by President Trump on Chinese imports.

Experts have reportedly cautioned that the ongoing housing crisis could worsen if Canadian lumber imports are significantly raised.

American consumers could be in store for significant changes as this intense trading landscape continues to threaten inflation.