The trade dispute between North America and the United States has escalated sharply as both Mexico and Canada respond to new tariffs imposed by President Donald Trump. Beginning on February 4, 2025, U.S. tariffs of 25% on goods from Canada and Mexico, with 10% on Canadian energy products, have triggered retaliatory measures from both nations, primarily aimed at protecting their national economies.
Mexican President Claudia Sheinbaum announced her country's plans earlier this week, stating, "I intend to implement the ‘Plan B', which includes both tariff and non-tariff measures to protect the interests of Mexico." This declaration came shortly after it was revealed Canada would impose equivalent tariffs on approximately $155 billion worth of imports from the United States.
According to Prime Minister Justin Trudeau, this series of retaliatory tariffs is meant to defend Canadian jobs and citizens. “It will be difficult for both parties,” he remarked, echoing concerns from many business owners who fear the increasing uncertainty surrounding international trade.
The latest tariffs come at a time when both economies are already grappling with inflation and supply chain disruptions. From the perspective of American manufacturers, the tariffs present serious challenges. With estimates from the Yale budget laboratory indicating these measures could cost the average American household between $1,000 and $1,200 per year, the fears of rising consumer prices are palpable. Gregory Daco, the Chief Economist of consulting firm EY, noted, “These duties will likely push inflation rates higher, exacerbated by already stubborn price increases affecting various goods.”
Among numerous sectors affected, the agricultural industry stands out. Farmers across the U.S. worry they will be caught between retaliatory tariffs implemented by trading partners. Past experiences show how they suffered when tariffs were levied during Trump’s previous term, causing them to scale back production and seek government assistance.
Local businesses are now preparing for significant changes as they navigate the new tariffs. From restaurants to retail, responses have varied widely. For example, the owner of Penny Ice Creamery in California expressed concern about rising prices for imported goods. “I feel bad having to keep increasing prices. The tariffs just add more complications onto already tight margins,” owner Zach Davis said.
Notably, as part of their retaliation, Canadian provinces are also taking measures to protect local industries. Susan Holt, Premier of New Brunswick, announced immediate actions such as removing American alcoholic products from provincial stores, which collectively account for approximately $40 million. Holt highlighted, “We want to verify if Canadian options exist, especially for new agreements moving forward.”
Meanwhile, leaders from Canada’s Northwest Territories are also voicing their dissent against these tariffs, with Premier Ranj Pillai labeling the measures as “an insult to our partnership.” He stated their government would be reviewing policies to minimize purchases from U.S. businesses, emphasizing the urgency behind local consumption.
Beyond immediate tariffs, broader discussions about interprovincial trade have gained momentum. Premier Holt has initiated conversations concerning barriers to trade within Canada, fostering collaboration among provincial governments to boost local economies. “We can’t ignore the obstacles to our internal commerce—there are many hurdles we need to eliminate,” Holt affirmed.
Industry insiders argue for immediate federal action to mitigate the economic fallout and encourage cooperation between Canada and the United States. The Atlantica Centre for Energy has called upon governments to resolve this trade conflict quickly, citing how intertwined their energy systems are. Michelle Robichaud from the centre stated, “This trade war doesn't make sense—price hikes will be unavoidable for both consumers and businesses.”
With negotiations simmering and differing viewpoints on trade policy, the forthcoming weeks are set to be pivotal as the impacts of these retaliatory tariffs are felt throughout North America. Businesses, consumers, and governments will need to navigate the turbulent waters of this trade dispute carefully.
Overall, the stakes are high, and with both nations standing firm on their respective tariffs, it begs the question of whether collaboration can emerge between neighbors to resolve these disputes amicably or if they will continue to grit their teeth through economic hardships.