On Wednesday, March 5, 2025, President Donald Trump and Canadian Prime Minister Justin Trudeau engaged in a tense exchange over new tariffs on Canadian imports to the U.S. This occurred a day after Trudeau openly criticized Trump’s decision to impose 25% tariffs on goods from Canada.
In an unexpected turn of events on Thursday, March 6, Trump granted exemptions on tariffs for several goods imported from Canada and Mexico, mitigating the escalating tension.
The exemption, which aligns with the North American Free Trade Agreement standards established during Trump’s first term, will last until April 2. After this date, Trump plans to enforce a new round of retaliatory tariffs on products from various countries.
A senior administration official indicated that about 50% of goods imported into the U.S. from Mexico and roughly 38% of goods from Canada will be exempt. This includes key items like potash, a crucial ingredient in fertilizers.
However, certain Canadian energy products will be subject to a 10% tariff. Other goods, including computers from Mexico, will face a 25% tariff, according to the official.
Following his interaction with Trudeau on Wednesday, Trump used Truth Social to share his thoughts on the discussion. He described the call as “somewhat” friendly but accused Trudeau of political scheming. “Justin Trudeau, of Canada, called me to ask what could be done about Tariffs. I told him that many people have died from Fentanyl that came through the Borders of Canada and Mexico, and nothing has convinced me that it has stopped,” Trump posted.
Trump claimed Trudeau informed him that the issue with fentanyl had gotten better, to which Trump responded that it was “not good enough.” He also suggested that Trudeau was leveraging the tariff dispute to strengthen his political position.
The heated exchange was preceded by Trudeau’s impassioned press conference on Tuesday, March 4, where he addressed Trump directly. “Even though you are a very smart guy, this is a very dumb thing to do,” Trudeau said, citing a previous assessment of Trump’s tariff policies by the Wall Street Journal.
As per the Canadian government, less than 1% of fentanyl intercepted at the U.S. border originates from Canada. Canada has implemented a $1.3 billion border plan and other measures to tackle the problem. However, Trump remains adamant that Canada’s efforts to curb fentanyl are inadequate.
In response to the U.S. tariffs, Trudeau informed Trump that Canada would impose 25% tariffs on $155 billion worth of American goods. If the issue remains unresolved, the plan is to start with an immediate $30 billion and follow up with the remaining $125 billion in 21 days.
At the Tuesday press conference, Trudeau criticized the U.S. for instigating a trade war with Canada while showing a readiness to cooperate with Russia and Vladimir Putin, whom Trudeau described as a deceitful dictator.
The trade dispute has caused concern in markets and among consumers in both countries. The U.S. imported goods worth $412 billion from Canada in 2024, making Canada America’s third-largest trading partner, according to the U.S. Census Bureau.
On Wednesday, Trump offered a temporary reprieve for certain businesses. Commerce Secretary Howard Lutnick announced a one-month exemption from the 25% tariffs for automakers that comply with the current free trade agreement, a move expected to benefit Detroit, Michigan-based automakers like Ford, General Motors, and Stellantis.
Leaders in Canadian provinces have threatened further retaliatory actions, including halting electricity exports to the U.S. and preventing U.S. companies from bidding on provincial contracts. This has stirred fears of a broader trade war involving the U.S., Canada, and Mexico, with experts cautioning against such a scenario.
Trudeau has consistently argued that the tariffs violate the United States-Mexico-Canada Agreement (USMCA), a trade deal negotiated by Trump during his first term. During his press conference, Trudeau stated, “We’re insulted, we’re angry, but we’re Canadian, which means we’re gonna stand up for each other, we’re gonna fight…and we’re gonna win.”
Trump continues to intimidate Trudeau and Canadians by suggesting that Canada could avoid tariffs by becoming the 51st state of the U.S.
The imposed tariffs could lead to higher consumer prices and potential job losses in both countries, particularly in the automotive industry. Economists have warned that prolonged disputes could hinder economic growth in both nations.
The Brookings Institution has cautioned that imposing 25% tariffs on most imports from Canada and Mexico could put the USMCA’s future at risk. Experts recommend that all three countries should enhance their economic integration and competitiveness in North America, while addressing non-trade issues such as migration and drug interdiction.
