U.S. President Donald Trump directed his administration to impose reciprocal tariffs against nations that have import taxes on U.S. products, escalating a trade war that threatens to rekindle inflation worldwide.
“Reciprocal makes tariffs really fair,” Trump told reporters Thursday in Washington. “There wouldn’t be any exemptions.”
The move follows Trump’s decision earlier this week to tax steel and aluminum products from Canada and other countries that were exempted from levies he originally imposed in 2018, during his first term. Two weeks ago, Trump agreed to pause for a month the blanket 25% tariffs against Canada and Mexico that he had announced Feb. 1 in a bid to force both neighbours to tighten border security.
Those measures were lighter on Canadian energy and critical minerals – at 10% – but would still impact exports from Canada. The U.S. gets about a fifth of its oil supply from Western Canadian crude. China’s export bans on several minerals needed for high tech, such as germanium, make Canada one of the few producers in the West. Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK) recovers germanium from zinc ore at its Trail smelter in British Columbia.
The executive orders, set to take effect on March 12, would reapply a 25% tariff on Canadian steel and raise the import tax on aluminum products to 25% from 10%. Additional derivative products could be added later.
“We think the European Union is wonderful. We all love Europe, love the countries in Europe, but the European Union has been absolutely brutal on trade,” Trump said, repeating language he has used before. “Canada has been very bad to us on trade, but now Canada is going to have to start paying up.”
Trump’s increasingly belligerent attitude is threatening to derail the world’s biggest trade relationship – as Canada and the U.S. each represent the other country’s top economic partner. With Mexico, the countries are part of the reworked North American Free Trade Agreement, now known as the Canada-United States-Mexico Agreement, or CUSMA.
Official data show Canada exported 77% of its goods to the U.S. in 2023 while importing about half of its goods from its southern neighbour. Steel and aluminium are key exports for Ontario and Quebec, Canada’s two most populous provinces.
CUSMA dealing
The move to tax steel and aluminium “further demonstrates the Trump Administration’s eagerness to disregard the United States’ CUSMA and World Trade Organization trade commitments,” lawyers at Osler said Thursday in a note. “This poses a clear problem for Canada and Mexico when the Trump Administration has indicated it intends to use a trilateral review of the CUSMA, scheduled for 2026, to renegotiate the agreement.”
The prospect of U.S. import taxes drove all 13 of Canada’s premiers to descend on Washington this week to lobby Republican lawmakers.
After meeting Wednesday with senior Trump administration officials such as deputy chief of staff James Blair, British Columbia Premier David Eby called the discussion “good and constructive.” Still, he cautioned, the premiers were told “to take the president at his word, that he should be taken seriously.”
Combined, Trump’s proposed tariffs and partial retaliation from all trading partners would depress U.S. gross domestic product by 1.7 percentage points over the long term, according to the Tax Foundation, a Washington-based research group. That's more than two-thirds of the economic benefits that Trump's proposed tax cuts stand to generate. “Historical evidence and recent studies show that tariffs are taxes that raise prices and reduce available quantities of goods and services for U.S. businesses and consumers, which results in lower income, reduced employment, and lower economic output,” the Tax Foundation said Thursday in a tweet.
March 13, 2025
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