Canada is supporting President Donald Trump’s escalating trade war fallout, with economists warning of a potential recession if it threatens a surge in grocery prices, major job losses and even a potential recession.
The United States is Canada’s largest trading partner, accounting for nearly two-thirds of Canada’s imports and receiving more than 70% of exports. But under Trump’s new “liberation day” tariffs, Canadian goods are 25% and energy is 10% – Ottawa is currently facing economic intestinal punches that could cross major states, industry and national election campaigns.
Trump has repeatedly denounced what he calls “unfair” trade practices, citing imbalances in Canada’s trade with the United States to justify drastic tariffs.
“This is the beginning of America’s liberation day,” Trump said last week. “We are going to charge a country that has done business in our country, takes jobs, takes wealth, takes a lot of it over the years, and takes so much. They have taken so much from our country, our friends and our enemies.
11th week in the office where Trump tries to focus on tariffs as President promotes “Liberation Day”
Canadians will protest President Donald Trump’s tariffs and other policies in Toronto on March 22, 2025. (Reuters/Carlos Osorio)
An increase in tariffs could mean that Americans will see high price tags on everything from fertilizer and oil to vehicles, to machinery, to plastic and wood products.
Similarly, Canada implemented mutual tariffs on US goods worth $30 billion in mid-March. So not only does Canadians feel losses on a macro scale, but grocery stores are surged to include lush greenery, citrus, orange juice, beef, pork, fish and more.
Ottawa has yet to announce tariffs on US imported vehicles as concerns have been reported about possible further hindering Canada’s economy. According to the Canadian Outlet Financial Post, although US products are reportedly considering impose tariffs in response to Trump’s April 2nd announcement, some $95 billion worth of US products.
“They are in the middle of a general election campaign,” Andrew Hale, senior policy analyst for trade policy at the Heritage Foundation, told Fox News Digital. “I think it will be very difficult to negotiate and take these steps during the election campaign.
“Everything they do has the weight of the election,” he added, noting that Canadian politicians need to balance things carefully.
“If they place mutual tariffs, it will damage Canada’s standard of living and it will affect Canada as this already has an impact,” Hale said.
Canadians claim they are canceling their trip to us due to the rest of the Trump terminology
Mark Carney, the leader of the Canadian Liberal Party, will speak to his supporters at a rally in Montreal on March 27, 2025. A federal election will be called and Canadian voters will go to the poll on April 28th. (Andrej Ivanov/Getty Images)
While Trump claims that his tariffs protect the US manufacturing industry, particularly the automotive sector, he argues that fallout could be far more serious for Canada. Immigrant Mark Miller warns that up to 1 million jobs in Canada are at risk.
“Most Canadians live within 100 miles of the US border, so obviously they’re going to be heavily affected,” Hale said. “Most Americans aren’t.”
Hale noted that while tariffs affect the entire United States, the most intense historic areas are industries closely tied to Canadian imports such as agriculture. For example, the US sources 90% of Canadian potash fertilizer.
“This will have a disproportionate impact on border states,” Hale said, but he added that economic tensions in Canadian regions like Ontario will be much greater.
Canadian leaders have already expressed concern that as many as 160,000 jobs in Quebec could result in an additional 500,000 jobs being lost in Ontario.
Both Quebec and Ontario are two of Canada’s most likely provinces to have been hit hardest due to their heavily reliance on steel, aluminum, timber and forest sectors for export.
Workers will load logs on Western Forest Products Ladysmith Log Sort trucks in Ladysmith, British Columbia, Canada on February 18, 2025. Canada is the largest foreign wood supplier in the United States and already handles a higher mission with shipments that began last summer. (James McDonald/Bloomberg via Getty Images)
Canada could face a recession this year if it cannot curb Trump’s tariff attacks this year, Oxford Economists first warned in a report last November.
Previous tariff wars between trading partners in the first Trump administration resulted in billions of dollars in losses for Americans and their foreigners.
Trump holds a “very productive call” with the Canadian Prime Minister: “We agree with a lot.”
But Trump is doing US banking operations that are less severely affected than countries like Canada.
The full impact of the tariff war with Canada remains uncertain as Washington imposes sudden tariffs on the European Union, China and Mexico. Trump has pledged to target the “Dirty 15,” a country that accused them of making the most contribution to the US trade deficit.
Cambodia, India, Indonesia, Japan, Malaysia, South Africa, South Korea, Switzerland, Taiwan, Thailand and Vietnam are expected to be among the next targets in Trump’s April 2 tariff announcement, which he calls “liberation day.”
Details of Trump’s next steps in the tariff war between Canada and dozens of other countries have created a sense of uncertainty ahead of the April 2nd deadline.
“A report from the Bureau of Economic Analysis last week shows that PC inflation in the ongoing core personal consumption expenditure is 2.8%. Therefore, inflation can be argued, has not fallen, and certainly price levels continue to rise,” he said. “Consumer spending has dropped sharply in both Canada and the US.”
President Donald Trump will make his remarks after signing an executive order on February 13, 2025 on mutual tariffs in the oval office. (Andrew Harnik/Getty Images)
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“Companies want certainty. We cannot make future investment decisions in this climate,” he added, noting that while the recession may be on the Canadian horizon, there are too many variables to predict in the US at this point.
“What I know is that I want to be able to have companies, banks, and plans that are investing in the project,” Hale said. “Hopefully we have a clear idea (on Tuesday) and we’ll be able to use it because this is all going to land.”
