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(Bloomberg) — Canada braced for economic turmoil and began rolling out retaliatory trade measures after President Donald Trump signed an executive order imposing 25% tariffs on almost everything the US imports from the country, and 10% on energy.

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Trump’s executive orders invoked emergency powers to justify tariffs starting at 12:01 a.m. Washington time on Tuesday, blaming Canada and Mexico for insufficient action to curb the production and trafficking of fentanyl, the powerful synthetic opioid that has led to hundreds of thousands of deaths in North America.

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Prime Minister Justin Trudeau has scheduled a news conference for 8:30 p.m. Ottawa time to announce Canada’s response to the tariffs, while other political leaders began taking their own actions. 

David Eby, the premier of British Columbia, directed the provincially owned liquor distributor to remove some alcohol brands made in Republican-led states from the shelves of retail stores — and to cease further purchases. The province will adopt a Canada-first policy for all government procurement, he said. 

“President Trump’s 25% tariffs are a complete betrayal of the historic bond between our countries and a declaration of economic war against a trusted ally,” Eby said. 

Trump’s emergency declaration means he won’t wait for formal procedures outlined in the US-Mexico-Canada Agreement, which the president signed in 2020 and hailed as a “colossal victory” in an update to the North American trade deal that was crafted in the early 1990s.  

Trump’s order included a clause setting out even higher duties if Canada retaliates, which its leaders have pledged to do in a way that aims to insulate Canadians and pressure Americans. 

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“Trump’s tariffs will devastate our economy,” said Doug Ford, leader of Ontario, Canada’s most populous province and the home to an automotive industry that’s tightly integrated with the US and Mexico.

Rapid Impact 

Business groups expressed outrage and dismay. The Canadian Chamber of Commerce said it was a “profoundly disturbing” decision and will “drastically increase the cost of everything for everyone.” 

Linda Hasenfratz, executive chair of auto parts manufacturer Linamar, said in an interview before the announcement: “It will lead to markets collapsing, sales dropping, layoffs, all the things that President Trump doesn’t want.” Linamar operates in all three USMCA countries. 

“The impact is going to be rapid, in terms of our customers on the auto side. I just don’t think they can sustain production, which in turn has a pretty immediate impact on our production levels.” The US is by far Canada’s most import market for exports. 

The US had a trade deficit in goods of about $55 billion in the first 11 months of last year. The US exported $320 billion worth of products to Canada and imported $375 billion. Crude oil is the biggest reason for the gap — excluding energy, the US had a trade surplus with Canada. 

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Pierre Poilievre, leader of the Conservative Party, which is ahead in public opinion polls, called for a “Canada First” dollar-for-dollar retaliation against the US, echoing Trump’s “America First” slogan.

Poilievre said income from Canadian tariffs should be earmarked for supporting workers and businesses, alongside tax cuts, expanding energy and trade infrastructure, and investing in its military and borders.

A softwood lumber trade group in British Columbia decried what it called “a punitive, unjustified protectionist measure” and said Trump’s tariffs will increase building costs at a time when affordability is already a concern for Americans. The new tariffs add to existing duties already imposed by the US. 

Danielle Smith, premier of Canada’s oil heartland of Alberta, took partial credit for the lower 10% tariff on energy and reiterated her opposition to restricting or taxing Canadian energy exports in retaliation.

—With assistance from Jacob Lorinc, Laura Dhillon Kane, Brian Platt, Randy Thanthong-Knight and Robert Tuttle.

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