Canadian Prime Minister Justin Trudeau expressed optimism on Thursday following indications from the United States about a potential delay in implementing significant tariffs on Canadian goods for a month. Nevertheless, Trudeau underscored that Canada would maintain its planned retaliatory tariffs for the moment.
This announcement came after U.S. President Donald Trump stated that he would delay imposing 25% tariffs on many Mexican goods amid concerns about the onset of a broader trade conflict. U.S. Commerce Secretary Howard Lutnick had mentioned earlier that tariffs against both Canada and Mexico would “likely” face postponement. However, no official decision concerning Canada has yet been made.
This marks the second occasion on which Trump has announced a one-month deferment since he first revealed the new tariffs in early February.
Trudeau previously indicated that Canada could see a prolonged trade conflict with the U.S. following a “colorful but constructive” conversation with Trump earlier in the week. The Canadian Prime Minister confirmed that both nations are actively engaging in discussions to limit the detrimental effects of these tariffs on specific industries and workers. He reiterated that Canada will not retract its retaliatory measures until the tariffs on Canadian goods are removed.
Earlier in the week, Trump instigated a fresh trade war by imposing tariffs on the U.S.’s three primary trading partners—Mexico, Canada, and China—prompting swift counteractions from these countries and unsettling financial markets. Trump introduced a 25% tariff on Mexican and Canadian imports, though Canadian energy faced a reduced levy of 10%.
On Thursday, Commerce Secretary Lutnick mentioned during a television interview that a suspension of the 25% tariffs on Canada and Mexico might extend to most products and services for a month. He clarified that this exemption had previously been restricted to the automotive industry.
Lutnick, speaking on CNBC, suggested that this one-month tariff delay would likely encompass all goods and services covered under the United States-Mexico-Canada Agreement (USMCA), the trade pact that replaced NAFTA during Trump’s tenure. He estimated that the exemption could apply to over half of U.S. imports from Canada and Mexico.
Trudeau noted Lutnick’s remarks echoed the dialogue Canadian officials have maintained with the Trump administration. “I’m waiting for an official pact to properly address Canada’s response,” he stated, remarking that it is a positive development yet not definitive enough to influence Canada’s current retaliatory stance.
Notably, following another round of tariffs, Trump granted a one-month exemption for U.S. car manufacturers. This exemption came post-discussions with officials from Ford, General Motors, and Stellantis, where Trump encouraged a relocation of auto production to the United States to sidestep tariffs.
Canada’s initial response involved $30 billion Canadian (approximately $21 billion USD) in retaliatory tariffs on numerous U.S. products, including food items, appliances, motorcycles, and more. Ottawa plans to implement an additional $125 billion Canadian ($87 billion USD) in tariffs targeting American goods such as electric vehicles, produce, beef, electronics, steel, and trucks in the coming weeks.
Ontario’s Premier, Doug Ford, announced plans to increase electricity costs for 1.5 million American homes as a counter-response to Trump’s tariffs. Ontario, which exports electricity to several U.S. states, aims to implement this starting Monday.
Ford conveyed reluctance but insisted that they would persist with these measures until President Trump revokes all tariffs. “President Trump has created chaos,” Ford stated. “The solution is simple: drop the tariff threats completely and collaborate to forge a deal that stimulates job growth and economic development on both sides of the border. Until then, we will steadfastly uphold our position.”
Canada, being the top export destination for 36 U.S. states, sees around $3.6 billion Canadian (about $2.7 billion USD) in goods and services exchanged across the border daily. Despite Trump’s assertions that the U.S. does not depend on Canada, the reality is that nearly 25% of the oil consumed daily in America is Canadian. Furthermore, about 60% of U.S. crude oil imports and 85% of electricity imports originate from Canada.
Moreover, Canada serves as the leading foreign supplier of steel, aluminum, and uranium to the U.S. While also providing critical minerals and metals importation vital for U.S. national security. Canadian provinces are now striving to diminish inter-provincial trade barriers to reduce reliance on the U.S. market.
