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News

Canada was spared from Trump’s ‘Liberation Day’ tariffs. Many threats remain

OTTAWA — U.S. President Donald Trump has brought in several layers of tariffs against Canada, and threatened others, while sowing confusion over the purpose and timelines of the levies in social media pronouncements and off-the-cuff remarks.

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Canada was spared from Trump’s ‘Liberation Day’ tariffs. Many threats remain

Canada still faces wave after wave of tariffs imposed by U.S. President Donald Trump, from autos to steel and aluminum

By Joanna Smith
Semi-trailer units and tanker trucks queue up beneath a gantry sign reading "Blue Water Bridge to U.S.A.," while three Canada-bound trucks come the other direction, toward the camera.
U.S.-Canada trade has been upended by President Donald Trump's imposition of tariffs, and the threat of more to come. Photo: AFP via Getty Images/Geoff Robins
Apr 7, 2025
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OTTAWA — U.S. President Donald Trump has brought in several layers of tariffs against Canada, and threatened others, while sowing confusion over the purpose and timelines of the levies in social media pronouncements and off-the-cuff remarks.

Canada’s federal government is paying attention to all those utterances, but basing its response on what is actually on paper: executive orders and proclamations detailing the legal authority behind Trump’s actions.

Talking Points

  • President Donald Trump has given Canada an indefinite extension on its partial reprieve from universal tariffs, but went ahead with duties on autos, steel and aluminum
  • Canada added counter-tariffs on autos to its retaliatory response, while holding fire on another wave of duties $125 billion worth of U.S. products

“One thing we have learned is to take it step by step, to listen to what the president says very carefully,” François-Philippe Champagne, who was then industry minister, said in February. “At the same time, the only way you can operate like that is to make sure that you act on the basis of signed executive orders, so that you know exactly the rules and the details.”

Here is an updated rundown of the various tariff threats Canada is facing to help you keep up to speed—and separate what is real from what is not quite there yet.

Across-the-board tariffs linked to fentanyl crisis

On Feb. 1, Trump issued an executive order to impose 25 per cent tariffs on all Canadian goods, with energy products facing a lower tariff of 10 per cent. Trump said these tariffs, applied on top of any other duties, would stay until Canada convinced him it was doing enough to keep fentanyl out of the U.S. He also announced 25 per cent tariffs on all Mexican goods and additional 10 per cent tariffs on China.

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Two days later, he announced a 30-day pause on the tariffs after Prime Minister Justin Trudeau promised to appoint a “fentanyl czar” and make other moves to strengthen border security, on top of the $1.3 billion in measures announced last December. That pause ended on March 4, prompting Ottawa to launch the first wave of retaliatory tariffs on $30 billion worth of American products. Then came the carve-outs.

A partial, and indefinite, reprieve

On March 6, Trump lifted the universal tariffs on Canadian and Mexican goods that move through the United States-Mexico-Canada Agreement (USMCA). U.S. trade data shows that covered about 38 per cent of Canadian exports to the U.S. last year. Nearly all would be eligible for preferential tariff treatment under the trilateral free-trade deal negotiated during the first Trump administration. Since World Trade Organization rules allowed most Canadian exports to enter the U.S. with low or non-existent duties, many businesses did not until now consider it worthwhile to complete the paperwork needed to prove it. Trump also lowered the tariff on potash, a key ingredient in fertilizers, to 10 per cent. That is the same level of tariffs to be applied to Canada’s energy products. Potash, or energy products traded through USMCA, remain exempt from the fentanyl-related tariffs.

The amendment outlining the changes does not specify an expiry date. On April 2, Trump extended the partial reprieve indefinitely. If the U.S. decides to end the fentanyl-related tariffs entirely, then goods not considered compliant with USMCA would face a 12 per cent tariff. Energy products and potash would be exempt. So would anything eligible for duty-free treatment through USMCA that is “a part or component of an article substantially finished in the United States.”

Ottawa had initially planned another wave of counter-tariffs on $125 billion worth of U.S. goods, including things like birthday candles and tricycles but also cars, trucks and many of their parts. The federal government extended the consultation period, which also delayed implementation, after Trump first granted the partial reprieve. On April 2, Ottawa removed the timeline for those plans, saying it might tariff those goods in the future if the U.S. does not relent in the trade war.

“One thing we have learned is to take it step by step, to listen to what the president says very carefully.” 


Steel and aluminum

On Feb. 10, Trump announced he would restore and increase national security tariffs on all imports of steel and aluminum, slapping 25 per cent duties on both. In Canada’s case, that means removing an exemption the country has had since 2019. He also expanded the tariffs to include downstream products such as stainless steel sinks and horseshoes. Those took effect March 12. 

The Canadian Embassy in Washington, D.C., sent a written statement from spokesperson Tarryn Elliott in February saying the federal government is watching two official presidential actions on specific tariffs: the universal tariffs and those on steel and aluminum. Elliott said Ottawa understands those tariffs “would be cumulative” and may be applied on top of other duties and charges, meaning the metals could be double-tariffed.

Canada announced it would retaliate with 25 per cent tariffs on $12.6 billion of steel and $3 billion of aluminum products from the U.S., as well as another $14.2 billion worth of American products including computers and sports equipment. Those went into effect March 13.

Trump brought in global tariffs on steel and aluminum during his first administration. Ottawa retaliated with counter-tariffs, and won an exemption the following year while tariffs on the two metals from many other countries remained. On Jan. 20, the White House issued an “America First Trade Policy” memo that ordered a review of exemptions to those tariffs. It was due April 1.

Autos

On March 26, Trump signed an executive order to apply 25 per cent tariffs to imported light-duty vehicles and major parts that are not made in the United States. The auto tariffs took effect at 12:01 a.m. EDT on April 3. The duties on parts are set to come in no later than May 3.

Any autos that qualify for preferential tariff treatment under USMCA will have the 25 per cent tariff apply only to the value of non-U.S. content in the vehicle. Importers will have to provide documentation to prove compliance with USMCA and the U.S. origin of that content. U.S. Customs and Border Protection will apply the 25 per cent tariff to the entire vehicle if it finds the declared value to be inaccurate. When it comes to auto parts, the 25 per cent tariff will not apply to anything traded through the USMCA until the commerce secretary figures out a process for applying it only to non-U.S. content. That will be detailed in a future Federal Register notice.

Liberal Leader Mark Carney, in his capacity as prime minister, announced April 3 that Canada would retaliate with matching counter-tariffs on American-made vehicles—but not auto parts. U.S. imports of fully assembled vehicles that are not USMCA-compliant will be slapped with a 25 per cent duty. That same tariff will also apply to any non-Canadian and non-Mexican content in vehicles imported from the U.S. that are brought in through USMCA.

Global and reciprocal tariffs

On Jan. 20, the White House issued a trade policy memo ordering federal agencies to report by April 1 on the causes of U.S. trade deficits in goods, which Trump and his economic advisers say has led to a decline in U.S. manufacturing—and jobs. One of its proposed remedies: a “global supplemental tariff,” which would be across-the-board duties to restore perceived trade imbalances. It is also linked to Trump’s goal of using tariffs to generate revenue.

On Feb. 13, Trump announced he plans to impose reciprocal tariffs matching trade measures other countries have set up against the U.S., with an expansive definition that includes subsidies, red tape and “discriminatory or extraterritorial taxes.” A fact sheet it issued that day made clear Canada’s three per cent digital services tax is in the crosshairs.

Trump finally shared the details of those global and reciprocal tariffs on April 2, which he had started calling “Liberation Day.” While he spared Canada and Mexico from piling reciprocal tariffs on top of the ones linked to fentanyl, Trump announced nearly all other countries—including tiny islands in the Antarctic inhabited only by penguins and seals—would have tariffs starting at 10 per cent. 

Some countries would see those reciprocal tariffs increase depending on the size of their trade imbalances with the U.S. Although the White House said those numbers are linked to trade barriers, the U.S. used a surprisingly simple formula: take how much a country exports to the U.S., subtract how much it imports from the U.S. and divide the result by how much it exports. The White House then cut that percentage in half, approximately, to come up with its tariff rate.

The ‘20 per cent’ rule

The executive order on reciprocal tariffs added another wrinkle to the paperwork, including for Canada. It said those duties would apply only to the amount of non-U.S. content in a particular good, so long as U.S. content makes up at least 20 per cent of its value.

Let’s say a good is worth $100 and $20 of that value comes from U.S. content. The tariff would apply to the remaining $80. If another good worth $100 has $19 worth of U.S. content, the tariff would apply to the full value of the good. This matters for Canada when it comes to any goods that are considered not to comply with the USMCA, especially whenever the U.S. ends the fentanyl-related tariffs and replaces them with the 12 per cent duty.

Low-value goods

The Feb. 1 executive order eliminated the “de minimis” exemption for Canada, which allows goods worth less than US$800 to enter the United States duty-free. The exponential growth of e-commerce in recent years has increased the volume of packages arriving in the U.S., raising concerns it is a loophole for China or being used to import contraband.

On March 2, the White House amended the executive order to allow Canada to keep the exemption, but only until the U.S. has “adequate systems” to collect the duties. The White House trade policy memo had also ordered a review of de minimis, to assess both the loss of potential tariff revenues and the risk of importing contraband, including fentanyl. 

In January, before Trump returned to office, U.S. Customs and Border Protection proposed new rules to require more data about the contents of packages arriving under de minimis and prevent the rule from being used to circumvent tariffs brought in for national security reasons or to address unfair trade practices. On April 2, Trump signed an executive order to end the de minimis exemption for goods from China and Hong Kong. It will take effect May 2 at 12:01 a.m. EDT.

Copper

On Feb. 25, Trump directed his commerce secretary to look into possible tariffs on copper, citing perceived national security risks linked to the growing U.S. reliance on copper from foreign sources. They are the same national security authorities Trump is using to justify his tariffs on steel and aluminum.

Trump’s memo does not mention Canada, but the country accounted for about US$4 billion worth of imports of copper and related articles to the U.S. in 2024—making it the second-biggest foreign supplier after Chile. Canada exported $9.3 billion worth of copper and copper-based products in 2023, with 52 per cent of it going to the U.S.

Lumber

On March 1, Trump instructed the U.S. Commerce Department to investigate whether importing lumber was harming national security and whether tariffs or quotas could be a solution. The executive order does not name Canada, but does refer to softwood lumber—a long-standing trade irritant between both countries. Prices to harvest timber on government-owned land, known as stumpage, are set administratively in Canada. U.S. producers must pay market rates, so the U.S. argues the Canadian system amounts to a subsidy.

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United States-Mexico-Canada Agreement review

The continental free-trade agreement negotiated during the first Trump administration is up for review in July 2026. The White House trade policy memo, however, asked the U.S. trade representative to assess how the deal has affected “American workers, farmers, ranchers, service providers, and other businesses and make recommendations regarding the United States’ participation in the agreement.” That report was due April 1.

#aluminum #auto #Canada-U.S. trade #economy #markets #steel #tariffs #U.S.-Canada relations

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Semi-trailer units and tanker trucks queue up beneath a gantry sign reading "Blue Water Bridge to U.S.A.," while three Canada-bound trucks come the other direction, toward the camera.

Photo: AFP via Getty Images/Geoff Robins

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