(The Center Square) – U.S. consumers could start paying higher prices for goods from Canada as the two countries vow to tax imports on each other.
Canadian Prime Minister Justin Trudeau said Friday that he’s prepared for President Donald Trump to impose a 25% tariff on imports from Canada, a top U.S. trading partner.
“If the president does choose to implement any tariffs against Canada, we’re ready with a response – a purposeful, forceful but reasonable reasonable immediate response,” Trudeau said.
“We won’t relent until tariffs are removed,” the prime minister said.
Trudeau also said tariffs would hurt businesses and consumers in both countries.
“Tariffs would be bad for business – on both sides of the border,” the prime minster wrote on X.
Trudeau also warned of “difficult times” in the coming days and weeks.
White House Press Secretary Karoline Leavitt confirmed Friday that those tariffs are set to go into effect Saturday. Trump previously said those tariffs will continue until illegal immigration and fentanyl smuggling stop.
Trump will levy a 25% tariff on Mexico and Canada. He will also put a 10% tariff on imports from China over that country’s role in supplying the chemicals used to make fentanyl, a powerful opioid blamed for more than 75% of U.S. overdose deaths.
Trade between the U.S. and its northern and southern neighbors is governed by the United States-Mexico-Canada Agreement, or USMCA, which went into force on July 1, 2020. Trump signed the deal.
U.S. goods and services trade with USMCA totaled an estimated $1.8 trillion in 2022. Exports were $789.7 billion and imports were $974.3 billion. The U.S. goods and services trade deficit with USMCA was $184.6 billion in 2022, according the Office of the United States Trade Representative.
Trudeau called USMCA “the most successful trading relationship in the world.”
Tariff issues came to the forefront after Trump’s 2024 election victory.
“As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” Trump announced on Truth Social in November. “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
Trump also said Mexico and Canada “have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!”
Experts have suggested it could take decades for Mexico to reduce cartel drug trafficking.
John Paulson, founder of Paulson & Co. and a Trump campaign adviser, previously said Trump’s tariffs could generate $450 billion in revenue a year. How much money tariffs would ultimately bring in depends on multiple factors, including how other nations respond. That makes it “highly uncertain,” according to credit-rating agency Moody’s.
Tariffs could raise prices for U.S. consumers and slow economic growth. S&P Global, a credit-rating agency, predicted that Trump’s proposed tariffs – a 10% across the board hike and up to 60% for China – could boost inflation by 1.8% and lower U.S. economic output by 1%, according to a post-election report.
World Trade Organization Director-General Ngozi Okonjo-Iweala, a former Nigerian finance minister, previously warned that a trade war could hurt all players.
“If we have tit-for-tat retaliation, whether it’s 25% tariff [or] 60% and we go to where we were in the 1930s we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” she said at the Davos meeting.
This article was originally published at www.thecentersquare.com
