Canada waiting to see if Trump starts North American trade war with steep tariffs

WASHINGTON — Canada is waiting to see whether U.S. President Donald Trump follows through on his threat to impose economy-wide tariffs as key members of his administration suggest a final decision still has not been made.

U.S. Commerce Secretary Howard Lutnick told CNN on Monday that he would be discussing the tariffs with Trump throughout the day. The billionaire financier said Canada and Mexico had done a good job on enhancing border security but more needed to be done to stop the flow of deadly fentanyl.

“He’s going to decide today,” Lutnick said. “We are going to put it out tomorrow.”

A White House official confirmed on background Monday that the wording in the executive order means the tariffs would kick in at midnight.

Lutnick told Fox News on Sunday that while tariffs would be levied against America’s closest neighbours, the levels remained to be seen.

Trump’s executive order to implement 25 per cent tariffs on all Canadian products, with a lower 10 per cent levy on energy, was delayed until Tuesday after Canada agreed to introduce new security measures at the border.

On Sunday evening, the White House indicated the duties were likely to go ahead by issuing an amendment to the executive order which makes a “de minimis” exemption for low-value imports when tariffs come into force.

Canadian officials and premiers made a month-long diplomatic push in Washington but it remains unclear what Canada could do to persuade Trump to drop the tariff threats for good.

Prime Minister Justin Trudeau has said that if the levies go into force, Ottawa will revive its previously announced plan for retaliatory tariffs.

Those were to begin with an initial 25 per cent levy on $30 billion in U.S. products, with duties on another $125 billion in goods to follow three weeks later.

New York State Gov. Kathy Hochul said the small volume of drugs that may be coming across the northern border does not “justify the cataclysmic impact that tariffs will have.” She said her state and Canada are willing to work with Washington on the issue.

“But this is such an extreme remedy that is going to have a ripple effect across our entire economy,” Hochul said on CNN Monday.

U.S. Customs and Border Patrol data shows the number of people and drugs crossing illegally into the United States from Canada is minuscule compared to the volume coming across the southern border. It reports just 13.6 grams of fentanyl seized by northern Border Patrol staff in January.

Trump’s team hit U.S. news networks over the weekend to argue that the tariffs would help Americans, despite many economists warning that they will increase household costs.

A report issued by the Peterson Institute for International Economics last month said Trump’s tariffs on Canada, Mexico and China would cost the typical U.S. household more than US $1,200 a year.

Treasury Secretary Scott Bessent called that report “alarmist.” On CBS' Face the Nation on Sunday, Bessent called Trump’s plan “holistic” and said “there will be tariffs, there will be cuts in regulation, there will be cheaper energy.”

He said that Mexico has proposed matching Washington’s tariffs on China and Canada should do the same, leaving room for areas of negotiation.

When asked whether that action would thwart the tariff threat, Bessent replied that “maybe the tariff wall goes up, and then we see what happens from there.”

Many Canadian officials have said that Trump’s ongoing tariff threats are tied to an upcoming mandatory review of the Canada-U.S.-Mexico Agreement. The continental trade pact was negotiated under the first Trump administration to replace the North American Free Trade Agreement.

Even if Canada avoids Tuesday’s levies, it won’t escape the effects of Trump’s massive tariff agenda.

He ordered 25 per cent tariffs on all steel and aluminum imports into the United States on March 12. Trump signed an executive order to implement “reciprocal tariffs” by raising U.S. duties to match the tax rates that other countries charge on imports starting April 2.

Trump also floated the idea of imposing tariffs on automobiles and signed executive orders to look into levies on copper and lumber.

On Monday, he added agricultural products to his growing list of tariff targets.

“To the Great Farmers of the United States: Get ready to start making a lot of agricultural product to be sold INSIDE of the United States,” Trump posted on social media. “Tariffs will go on external product on April 2nd. Have fun!”

This report by The Canadian Press was first published March 3, 2025.