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Prior to being elected, Donald Trump promised tariffs on Canada, but the threat was not taken seriously. On January 31, 2025, Trump announced a 25% tariff on Canadian goods, 25% on Mexican goods and 10% on Chinese goods. He had said those tariffs would go into effect Saturday, February 1 but has since pushed the effective date to the upcoming Tuesday. Trump has used many reasons for the tariffs. Most recently, he accused Canada of contributing to fentanyl overdoses in America. He’s said that the only way the Canadian tariffs would come off is if Canada proves it is doing more to stop the smuggling of fentanyl into America. In response to Trump’s tariffs announcement, Canadian Premier David Eby has announced sweeping tariffs on American goods, with those tariffs being aimed primarily at red states.
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What Happened
Before going any further, I want to explain what a tariff is and who it hurts. A tariff is a tax placed on imported goods from other countries. The purpose of a tariff is to lessen national competition and reduce trade deficits. But Trump is doing it all wrong when taking into account tariffs of this measure are usually placed on enemy nations.
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Trump has placed a general 25% tariff on Canadian goods and a 10% tariff on Canadian energy. Canadian Prime Minister Justin Trudeau and Premier Eby are looking to inflict pain on American conservative states. In a speech, Trudeau addressed Americans about the tariffs. “This is a choice that, yes, will harm Canadians, but, beyond that, it will have real consequences for you.” Trudeau acknowledged “America is Canada’s closest friend” but that the Canadian people had to respond to Trump’s act of aggression. This has brought Tesla into the limelight, since the company is owned by Elon Musk, Trump’s righthand.
Tesla sells more than 60,000 of its electric vehicles in Canada annually. Business Today points out that “Canada’s EV adoption rate is outpacing that of the U.S., with nearly 17% of new cars sold in the third quarter of 2024 being fully electric, compared to just 8% in the U.S.” The Canadian electric vehicle industry is booming, and Tesla’s growth could be stunted by new tariffs.
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Chrystia Freeland, Canada’s former finance minister, said in an interview with The Canadian Press, “We need to be very targeted, very surgical, very precise.” Freeland, who’s also a Liberal Party leadership contender, has concluded that direct aggressive action through the door is the only way to deal with Trump. She has suggested putting a “100%” tariff on Tesla which could ultimately decimate the company’s presence and profits in Canada. An aggressive tariff on Tesla would hurt Trump’s buddy Elon and his company as well.
Canada’s threats to tariff Tesla come at a time when the company is already struggling to stay atop a sea of competition. The New York Times reports that “Tesla sales fell slightly in 2024, the first annual decline in the company’s history, as rivals in China, Europe and the United States introduced dozens of competing electric models, giving buyers more choice.” Tesla’s sales have fallen one percent over the past year, and that might not seem like much. But it’s indicative of failure to grow. The new Canadian tariffs would further hinder that growth.
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As for targeting American red states, Canada will move strategically to stand up for its workers and businesses. As a first step to counteract the Trump tariffs, Canadians will immediately stop buying liquor from red states and remove top-selling red state brands from the shelves of liquor stores, Premier Eby promised. “We won’t back down or be bullied into becoming another state,” said Premier Eby, according to Castlegar Source.
The Takeaway
Donald Trump has announced tariffs on several nations, including Canada, but Canada is fighting back. Although the neighbors up north acknowledge America as a friend, they have shown they will not be bullied. They stand prepared to take strategic action to counteract America tariffs by going after Tesla and American liquor. If this trade war commences February 4 as promised, Americans will pay more and feel more pain in their pockets.
This article was written by Jermaine Reed, MFA, the Editor-in-Chief of The Reeders Block. He also works an Adjunct College Professor. Join the email list to get notifications on new blog posts and books. This article is 100% human-written. And remember, if you see an error, that’s what makes us human.
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