Canada announced retaliatory tariffs on nearly $30bn worth of American imports after US tariffs on steel and aluminum imports went into effect on Wednesday.
The Canadian government said it will be following a “dollar-by-dollar” approach and institute 25% tariffs on American imports, including steel, computers and sports equipment.
Donald Trump first announced the tariff on all steel and aluminum imports in February and scheduled them to go into effect on Wednesday. The tariffs going into effect has started a chain reaction of retaliatory tariffs as countries around the world decide how to respond to Trump’s policy.
Canada’s announcement comes after the EU announced its own tariffs on American imports, including products such as motorcycles and whiskey, totaling $28bn.
Trump had doubled the steel and aluminum tariffs against Canada, in retaliation for Canada raising the prices on electricity exports to the US, to 50%. But the White House dropped the measure after Canada said it would hold off on its electricity tariff.
Meanwhile, the Mexican president, Claudia Sheinbaum, said the country would wait until 2 April to determine whether it will respond to the steel and aluminum tariffs.
Trump had initially announced 25% tariffs on all imports from Canada and Mexico, which were initially to take effect on 1 February, but paused the tariffs twice. The tariffs are now expected to go into effect on 2 April.
Canadian and EU leaders voiced regret over the impact the tariffs will have on domestic businesses, but argued countries need to respond appropriately to Trump’s actions
Mélanie Joly, the country’s minister of foreign affairs, said in a press conference on Wednesday that the country will “not back down and we will not give into this coercion”, denouncing the chaos Trump has ensued on the global economy.
“The only constant in this unjustified and unjustifiable trade war seems to be President Trump’s talks of annexing our country’s through economic coercion,” Joly told a press conference.
Ursula von der Leyen, president of the European Commission, said that the steel and aluminum tariffs were “unjustified trade restrictions”. “Tariffs are taxes, they are bad for business and worse for consumers. They are disrupting supply chains. They bring uncertainty for the economy,” she said.
Despite the criticism from global leaders, Trump defended the tariffs after meeting with the Business Roundtable, a group of key US business leaders on Tuesday. “Markets are going to go up and they’re going to go down, but you know what? We have to rebuild our country,” Trump said on Tuesday.
After a week-long slump, US markets started making small gains on Tuesday morning after inflation figures that were better than projected.
Trump and members of his administration have spent the last week on the cable news circuit downplaying the impacts the tariffs could have on the economy. When asked whether the US could experience a recession in an interview with Fox News on Sunday, Trump said the country was in a “period of transition”.
“What we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us,” Trump said.
Kevin Hassett, head of the national economic council, told CNBC on Monday that Trump’s economic policies were having their intended effect of “creating jobs in the US” and said there were lots of reason to be “bullish going forward”.
The uncertainty around Trump’s trade policies has made officials with the Federal Reserve all but confirm that they will not be changing interest rates at their meeting next week. The Fed chair, Jerome Powell, said in prepared remarks last week that there was “heightened uncertainty about the economic outlook” but said that the economy was stable for now.
“It remains to be seen how these developments might affect future spending and investment,” he said.
