Canada will maintain its initial retaliatory tariffs against the United States despite President Donald Trump's decision to postpone a 25% tariff on many Canadian imports for one month, senior Canadian officials confirmed Thursday. While Trump announced a temporary exemption for certain goods from Canada and Mexico, leaders in Ottawa signaled that they are prepared for a prolonged trade conflict, refusing to ease their response measures.
Two senior Canadian government officials, speaking on condition of anonymity, confirmed that Canada's first wave of response tariffs-valued at C$30 billion (US$21 billion)-will remain in place. These tariffs target a wide range of U.S. products, including orange juice, peanut butter, coffee, appliances, cosmetics, motorcycles, and certain pulp and paper goods.
Finance Minister Dominic LeBlanc announced that Canada would suspend a planned second wave of retaliatory tariffs worth C$125 billion (US$87 billion) that was set to take effect in three weeks. The next round of duties would have affected U.S. electric vehicles, dairy, beef, pork, electronics, steel, and trucks.
Ontario Premier Doug Ford criticized Trump's move, emphasizing that the temporary suspension does not guarantee long-term stability. "The only thing that's certain today is more uncertainty. A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless," Ford posted on X.
Ford also announced that Ontario will impose a 25% surcharge on electricity exported to 1.5 million Americans in Minnesota, New York, and Michigan starting Monday. British Columbia Premier David Eby said his province plans to introduce new fees for U.S. commercial trucks traveling through the province to Alaska.
Eby condemned Trump's trade policies, stating, "Yet again the president is sowing uncertainty and chaos, attempting to undermine our economy by implementing tariffs and then pulling them off."
Prime Minister Justin Trudeau indicated that Canada does not expect a resolution in the near term. "I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future," he told reporters.
A senior Canadian official described a tense phone call between Trudeau and Trump, stating that the U.S. president used profanity while criticizing Canada's dairy protections. The White House declined to comment directly, with Press Secretary Karoline Leavitt referring reporters to Trump's public remarks on trade.
Under the terms of Trump's revised executive order, imports from Mexico and Canada that comply with the 2020 U.S.-Mexico-Canada Agreement (USMCA) will be exempt from the 25% tariff for one month. However, about 62% of Canadian imports are expected to still face new tariffs due to non-compliance with USMCA, according to a White House official.
One notable exemption applies to Canadian potash, a key fertilizer for U.S. farmers, which will be subject to a lower 10% tariff rather than the full 25% duty. However, Canadian energy exports remain subject to Trump's separate 10% levy.
Trump also granted a one-month exemption for U.S. automakers from the new tariffs after speaking with executives from Ford, General Motors, and Stellantis, the parent company of Chrysler and Jeep.
Commerce Secretary Howard Lutnick warned that the exemptions could be lifted if Canada and Mexico do not make progress on Trump's demand to curb fentanyl trafficking into the U.S. "On April 2, we're going to move with the reciprocal tariffs, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table," Lutnick told CNBC.
Financial markets responded negatively to the uncertainty surrounding U.S. trade policy. The S&P 500 fell 1.8% on Thursday, extending a decline that has seen the index drop nearly 7% since mid-February.
Bill Sterling, global strategist at GW&K Investment Management, pointed to the shifting nature of Trump's trade policies as a primary concern for investors. "A continuation of this on again, off again tariff strategy, particularly with Mexico and Canada, is what is creating uncertainty in markets," he said.
"The rational economic response to business leaders when there's such a high degree of uncertainty is to sit on their hands and just defer making decisions," Sterling added.
Meanwhile, Lutnick dismissed concerns over market reactions, stating, "The fact that the stock market goes up or down a half percent on any given day is not the driving force of our outcomes. Our outcomes are driven by the goal of bringing factory production back to America."
While Canadian officials have vocally opposed Trump's trade policies, Mexican President Claudia Sheinbaum struck a more diplomatic tone after a phone call with Trump on Thursday.
"We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties," Sheinbaum said in a post on X.
However, Mexican and Canadian officials have privately expressed frustration with the lack of clarity from Washington. Sources from both governments told Reuters that negotiations with the Trump administration have been difficult, with shifting demands making a resolution elusive.
