NAFTA, the North American Free Trade Agreement, was established in 1992 by Canada, the United States, and Mexico. It was replaced in 2020 by the USMCA, which aims to provide better protections for workers, ensure more equitable trade, and be better suited to modern global trade. Both of these agreements promote free trade between the three North American partners: Canada, Mexico, and the United States.
The growing presence of Mexican cartels operating fentanyl and nitazene synthesis labs in Canada is one of the reasons cited by the White House for imposing tariffs in reply to Canada’s lack of care on their territory and borders.
The threat of an ongoing tariff war is also the direct consequence of Trump’s determination to drastically reduce the trade deficit with key partners like Canada, Mexico, and China.
A trade imbalance means imports exceed exports. Although Trump framed this as a negative issue, it is just normal, considering the large demographic gap between Americans and Canadians. In fact, Americans will be 347, 245 807 in 2025, while Canadians will be only 40, 126, 723.
The recent tariffs set by the U.S. president against Canada are scheduled for March 12th. Aluminum and steel are the main products affected by the American tariffs on their Canadian exports, with a 25% additional tariff, except for energy products which will only be subject to a 10% tariff.
These taxes would raise the cost of the product cited earlier for Americans, which will surely lead customers to seek alternative sources of supply. Concurrently, this would cause Canadian industries to lose their most important customer.
Ford’s CEO, Jim Farley, is angry about Trump’s tariffs. In fact, his company operates in Canada and the United States, and a 25% tariff represents a big threat to Ford’s survival, a staple of the American car industry. According to him, those tariffs offer American businesses “a lot of chaos and a lot of cost. ”
In response to their powerful neighbor, Justin Trudeau’s government planned to impose 25% tariffs on 155 billion dollars worth of U.S. goods on February 25. This includes different types of products that would cost 25% more for Canadians, such as motorcycles, cosmetics, and other grocery products.
While these tariffs are expected to hurt Canadian industries by making their products less competitive, they are seeking a new alternative market. For the United States, Trump’s policy may be beneficial in the short term by reducing the trade deficit but it risks complicating or breaking the relationship with a key partner in the long-term
