It looks like a trade war is really ‘on’ in the Americas, where Canada is retaliating against the US in a surprising and unprecedented manner. Canada has taken a bold step against the US after President Donald Trump imposed new tariffs on Canadian goods and energy exports.
The Trump tariffs impose 25% on Canadian products and a 10% tariff on Canadian exports of energy, a decision which has incited fury among the Canadian leadership. Ontario leader Doug Ford has released a series of tough steps and made it official that Ontario would not stand by and take the economic punch. He announced that he would cut energy supplies to US states, ban US alcohol, and cancel a $100 million contract with Starlink.
Ford said to the press, “If they want to try to annihilate Ontario, I will do everything – including cut off their energy, with a smile on my face.” This is the same kind of language Doland Trump uses.
One of the biggest and surprising retaliation from the Canadian side came when Ontario cancelled its $100 million deal with Elon Musk’s Starlink satellite internet provider. Starlink was supposed to connect 15,000 homes and businesses in the province. Starlink has over 5 million subscribers worldwide, and Canada is its largest market outside the US. This loss of contract will be a huge financial blow to Musk’s business. Ford clearly indicated that Ontario would not be backing American companies while the US government placed damaging tariffs. This action also sends a clear message to other US businesses that Canada will not shy away from severing ties if need be.
Canada is the largest energy supplier to the US, exporting crude oil, petroleum products, hydropower, natural gas, and electricity. The new tariffs are expected to drive up energy costs, particularly in Midwest states.
Tariff War
Prime Minister Justin Trudeau has also said that Canada will retaliate tariffs worth $155 billion on American goods. Additionally, US companies will no longer be able to bid on Ontario’s infrastructure projects, which are worth billions of dollars. Canada looks all prepared for the upcoming threat and retaliation from the US. However, it is hard to predict for how many days Canada will stand up against the US.
One should think that the US and Canada are not only neighbours but also good friends to each other on the international stage. Then why this trade war is happening?
The reason behind Canada’s retaliation is Trump’s aggressive trade policies against the country. The US President has imposed a 25% tariff on Canadian imports and a 10% tariff on energy exports by saying Canada is not paying much attention to the border and drugs are coming from the Canadian side. On March 6, Trump put a stay on the tariff. These tariffs directly harm Canadian industries and the economy. Trump has also used harsh language against Canadian leaders and even suggested that the US could annex Canada. Trump has repeatedly said Canada is the 51st state of the United States and has also humiliated Justine Justin Trudeau.
This has caused strong resentment among Canadian politicians and citizens alike. Trudeau accused Trump of giving preference to Russia ahead of Canada, labelling his actions as unjust and aggressive. Canada has sided with Ukrainians and supported Zelensky after the disastrous meeting in the White House last Friday. Doug Ford, however, stated that Canada will not sit idly by and suffer financial losses.
Also Read: Justin Trudeau wants to take on Putin, looking to send Canadian troops to Ukraine
Impact on Both Sides
The impact of this trade war will be felt on both sides. The US is dependent on Canadian energy, and if Canada cuts its supply, it will drive up electricity and fuel costs in states like New York, Michigan, and Minnesota. Ontario alone supplies power to nearly 1.5 million US customers. If Ford follows through with his threats, these states could face serious energy shortages. The ban on US alcohol in Canada will also hurt American liquor producers, as Canada is a big market for their products. Moreover, preventing US firms from bidding on Canadian projects will result in billions of dollars in lost revenue for American companies. This shows that Canada is using its economic leverage to hit the US and let the US feel the pain of Trump’s decisions.
The retaliation from the Canadian side is strong. Canadians are boycotting US goods, and the opposition leaders are on the same page with the government. However, previously, everyone has seen that the US threatened Canada but later suspended the threats. It is a similar situation with Canada, Canada has retaliated before but then proceeded to fall for the threat. The upcoming days will decide the future course of the Canada US relationship, but one thing is clear: the once ideal relationship between the two nations is deteriorating at record speed.
