When Donald Trump announced new tariffs against Canada, Mexico, and China, he never expected them to fight back. But now, Canada has retaliated with tariffs of its own, and the U.S. is caught off guard. In this video, we break down how this trade war escalated, the economic and military consequences, and the growing tensions between Trump and Canadian Prime Minister Justin Trudeau. Could this tariff war spiral into something even bigger? And what does it mean for the future of U.S.-Canada relations?
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NewsTranscript
00:00When US President Donald Trump announced tariffs against China, Canada and Mexico,
00:05he felt confident that none would respond. How could they? They'd be poking the bear
00:09and incurring his wrath. What Trump never expected was a trade war that has significantly
00:15escalated in the last 24 hours. So now he's got one, and he's furious. Canada has just retaliated
00:22to Trump's tariffs with tariffs of its own, and the United States is shocked. What has Canada done?
00:28Why does it matter? And what does all of this mean for both countries in the future?
00:33It all started on February 1st. That's when the White House website published a press release
00:38stating that Trump intended to implement a 25% tariff against Canada and Mexico,
00:44along with a 10% additional tariff on China. Trump wasn't done with Canada either. He also
00:50announced a 10% tariff on the country's energy resources. Trump was taking this bold action to
00:55hold all three countries accountable for their roles in enabling illegal immigration and the
01:00flow of fentanyl into the United States. The announcement hit Canada hard. For over 150 years,
01:07the Great White North has had no closer ally than the United States, literally. The US is Canada's
01:12neighbor to the south, with the two only being separated by a border that has traditionally
01:17been easy to cross. Their allies in trade, with the US importing $412.7 billion worth of goods
01:24from Canada in 2024, while exporting $349.4 billion to create total annual trade of over $760
01:32billion. Plus, they're military allies, both are NATO members, along with having several military
01:38pacts between themselves. Trump's moves have threatened that alliance, but the threat didn't
01:44appear to last long. Just two days after the White House announced the tariffs against Canada,
01:48Trump agreed to a 30-day pause. This wasn't a capitulation to external or internal pressure,
01:54according to Trump. But instead, Trump agreed to a pause following an emergency phone call from
01:59Canadian Prime Minister Justin Trudeau. The Canadian leader agreed to reinforce Canada's
02:04border with the US to stamp out the fentanyl trade, which delivered a reprieve to his country.
02:09That reprieve was temporary. True to his word, Trump held fire for 30 days. Unfortunately for
02:14Canada, he chose not to extend the pause beyond that period. On March 3rd, Trump announced that
02:20the US will move forward on its tariffs against Canada and Mexico. No room left for Canada or
02:25Mexico, Trump claimed in the White House. The tariffs, you know, they're all set. They go into
02:30effect tomorrow. Canada and the US had failed to reach a deal, according to the president.
02:35That meant Canada had to suffer the wrath of Trump's tariffs. But Trump has a problem. His
02:40tariffs have just been activated, just as he promised. However, Canada hasn't taken their
02:44implementation lying down. Rather than doing everything they can to cozy up to Trump and
02:49find a way to have him reverse his decision, Canada has done what Trump never expected.
02:54It's retaliated with tariffs of its own. On March 4th, Canada struck back against Trump,
03:00condemning his actions while announcing retaliatory tariffs. And it's not alone.
03:04Mexico's President Claudia Sheinbaum has also announced that she intends to retaliate if
03:09Trump's tariffs are still in place by March 8th. And just like Canada, China has responded to Trump
03:14by creating tariffs. All three caught Trump off guard. He expected his tariffs would force the
03:19nations to do America's bidding. Instead, he's just plunged the country into a trade war.
03:24This is a time to hit back hard and to demonstrate that a fight with Canada will have no winners,
03:29Trudeau claimed in a biting address on March 4th. Trudeau also had a message for Trump,
03:34addressing him as Donald, in a clear sign of disrespect caused by Trump calling Trudeau
03:39Canada's governor so many times. Canada's Prime Minister said,
03:43you're a very smart guy, but this is a very dumb thing to do.
03:46Trudeau isn't just firing shots in the trade war, he's targeting Trump's ego.
03:51In a separate statement, the Canadian government explained what its tariffs would look like.
03:55The country intends to impose a 25% tariff on around $30 billion worth of unspecified
04:01American goods. That's a warning shot for Trump. If America's president doesn't lift his tariffs
04:06within the next 21 days, Canada will extend its 25% tariff to $125 billion worth of goods.
04:14That covers around a third of Canada's total imports from the United States,
04:18and Trudeau is likely willing to go further if Trump doesn't negotiate soon.
04:23China's response was just as shocking to Trump. It's announced a 15% tariff on all imports of
04:28wheat, corn, chicken, and cotton from the US, in addition to a 10% tariff on other American
04:34agriculture products such as fruit, vegetables, and dairy. Mexico is the more cautious of the
04:39three. It's taking a wait-and-see stance, at least until March 8th. However, if Trump moves ahead
04:45with his tariffs, we can expect to see Mexico implement tariffs similar to those of China and
04:49Canada. So how will this affect things? Let's start by taking a look at the military.
04:55Trump's tariffs and the retaliations they've prompted could have a severe military impact.
05:00That's according to Defense News, which points out that Trump's tariffs reportedly include
05:04materials that are critical to America's defense supply chain. The new tariff war is intended to
05:10push American companies to expand the domestic production of these materials, such as steel and
05:15rare earths, that are needed in modern microelectronics. Trump is pushing to make the US
05:20less dependent on foreign suppliers, but his tariffs may create a cascade of negative effects.
05:26As director of the Center for Defense Concepts and Technology at the Hudson Institute,
05:30Brian Clark tells Defense News,
05:32It's going to cause prices to go up. And because these are commodities,
05:36if the prices go up because of these tariffs, that kind of affects everybody all at once.
05:40Just like oil, if you cut off a supply from one place or make a supply from one place more
05:45expensive, everybody else takes advantage, and the prices all go up everywhere.
05:50In other words, Trump's tariffs will make importing from Canada, Mexico, and China
05:54more expensive for everybody. Worse yet, other countries that aren't directly impacted by the
05:59tariffs will raise their prices as well, forcing the US to pay far more for the materials it needs
06:04to support its military while it tries to create domestic manufacturing. Trump is typically bullish
06:10on the issue. The higher the tariff, the more likely it is that the company will come to the
06:14United States and build a factory in the United States so it doesn't have to pay the tariff,
06:19Trump claimed in October 2024 during an interview with Bloomberg.
06:23Only that's not what appears to be happening. Canada's decision to retaliate with tariffs of
06:27its own takes away the move to America argument for companies. No matter where businesses go,
06:33they're going to be impacted by this tariff war. On the American military front, that will manifest
06:37as higher prices for materials, leading to the US's already massive defense budget no longer
06:42stretching as far as it once did. So it's clear that the new tariff war is going to impact Canada
06:48and the US militarily. If they don't end up fighting outright, creating issues within NATO
06:53in the process, both will still have to deal with being forced to spend more to maintain their
06:57militaries. But what are the more immediate effects of Canada's unexpected decision to
07:02retaliate against Trump's tariffs? For one, Trump has created a more united Canada at a time when
07:07he seems to be trying to force a divide in the country. America's president might have hoped
07:12there would be voices within Canada who supported his tariffs and his desire to make Canada America's
07:1751st state. Those voices don't exist. Instead, the New York Times claims that Trump's tariffs
07:23have created a sense of unity in a country that was previously divided along fierce political lines.
07:29Pierre Polyevre, who leads Canada's Conservative Party and is a rival to Trudeau, said,
07:34President Trump stabbed America's best friend in the back in the wake of the 25% tariff being
07:39implemented. Ontario Premier Doug Ford has already ordered the removal of all US-made liquor from
07:45Canadian store shelves, along with cancelling a contract with Elon Musk's Starlink. Nova Scotia
07:51is also planning to remove American liquor from stores. Regardless of political divides,
07:56Canada seems to be coming together to fend off what it may see as a much bigger enemy,
08:00its former ally, the United States. There have also been severe financial ramifications to
08:05Trump's and Trudeau's announcements. As fears of a trade war rose, the US stock market responded
08:11by going into decline. The S&P 500 index, which tracks America's 500 biggest companies, fell for
08:17two days straight, reaching its lowest level since Trump won the American presidential election in
08:21November 2024. In addition to the S&P 500's 1.2% drop, the technology-focused Nasdaq fell by 0.35%,
08:30with the Dow Jones Industrial Average dropping by 1.5%. Some of America's best-known retailers
08:36were hit hard, with Best Buy seeing 13% wiped off its share price in the space of two days.
08:42Those financial issues are going to continue. As Best Buy's Chief Financial Officer Matt
08:47Belunas points out, the giant wildcard is obviously how consumers are going to react
08:51to the price increases in light of a lot of price increases potentially throughout the year.
08:56In other words, the tariff is already damaging the US economy, and it's going to lead to higher
09:01prices across multiple industries, especially now that Canada has responded with its own tariffs.
09:07Some believe they have a stronger financial future thanks to the tariffs.
09:10Polls are inconclusive over whether Americans favour Trump's tariffs,
09:14and the United Automobile Workers' Union has defended Trump's decisions.
09:18The Labour group claimed that the United States-Mexico-Canada agreement had caused
09:22American job losses for too long, with tariffs being the remedy. Tariffs are a powerful tool
09:27in the toolbox for undoing the injustice of anti-worker trade deals, claimed the group.
09:32We are glad to see an American president take aggressive action on ending the free-trade
09:36disaster that has dropped like a bomb on the working class. Will the union be as glad now
09:41that Canada has announced its tariffs? That remains to be seen, and it could all come down
09:46to whether Trump is successful in attracting more companies to the US with his tariffs.
09:50He might have pulled it off if Canada hadn't retaliated. Now the future is far murkier.
09:56Speaking of the future, what does it hold now the tariff wars are underway?
10:01It's difficult to say, though Trump has claimed that he's willing to go further.
10:05Posting to Truth Social in the wake of Trudeau's tariff announcement,
10:08Trump said,
10:09Please explain to Governor Trudeau of Canada that when he puts on a retaliatory tariff on the US,
10:14our reciprocal tariff will immediately increase by a like amount.
10:18This appears to be a threat to impose a further 25% tariff on Canada in response,
10:23which would raise America's tariffs on the Great White North to 50%.
10:27Canada might again respond in kind, which would decimate the already shaken trade relationship
10:32it has with the US. Alternatively, Trump may be willing to do what he believes he does best,
10:38make a deal.
10:39Following Trump's Truth Social post, Commerce Secretary Howard Lutnick
10:43proposed a more clear-headed way forward for the two countries. He suggested that Trump will,
10:48probably, announce a tariff pact with Canada and Mexico that could lead to a compromise.
10:53Lutnick also says that Canada and Mexico had been on the phone with him all day,
10:57trying to show that they'll do better and the President's listening.
11:00Lutnick appears to be acting as though Trump still holds all the cards,
11:04with Canada and Mexico being the two nations begging for a resolution.
11:08But what if things got desperate enough to cause an actual war between the US and its
11:12northern neighbour? Let's look at how recent comments could play into this hypothetical,
11:17albeit unlikely, scenario.
11:19Trump has continued his mockery of Canada's Prime Minister, once again referring to him
11:23as Governor, while claiming that Canada should be subsumed into the US and become the 51st state.
11:29Rather than shrugging these supposed jokes off as he has in the past,
11:33Trudeau came firing back with a direct accusation against Trump.
11:36Perhaps he wants to sink the Canadian economy so that he can annex Canada,
11:40Trudeau said on March 4th. That's never going to happen. We will never be the 51st state.
11:46Trudeau also accused Trump of trying to jettison America's closest friends and allies,
11:50in addition to drawing some interesting contrasts between Trump's tariffs
11:53and his increasing closeness with Russian President Vladimir Putin.
11:58Trudeau referred to Canada as America's closest partner and ally,
12:01while calling Putin a lying, murderous dictator.
12:05Trudeau seems to be implying that Trump has fallen under the sway of a man who's supposed
12:08to be America's biggest enemy. If that's the case, as Trudeau seems to be claiming,
12:13then Canada will be prepared to fight to retain its freedom if Trump is really serious about
12:18making Canada the 51st state. On paper, it's a fight that Canada can't hope to win.
12:23According to Military Aggregator Global Firepower, or GFP,
12:27the US beats Canada in every single major category of war.
12:31America's population is almost 10 times the size of Canada's, giving it a manpower advantage of
12:36over 111 million people that GFP classes as fit-for-service. The manpower picture doesn't
12:42get any prettier for Canada when you look at active duty and reserve military personnel.
12:47The US has 1.328 million active soldiers and 799,500 reserves. Canada's numbers are tiny
12:55in comparison, just 68,000 active soldiers and 27,000 reserves. That discrepancy is seen everywhere.
13:02Canada's defense budget amounts to around 5% of what America spends on its military each year.
13:08The country's Air Force only has 351 assets compared to 13,043 that the US Air Force commands.
13:16Canada's 74 tanks and 21,704 armored vehicles aren't going to be much help in a ground war
13:23when the US has 4,640 tanks and over 391,000 armored vehicles that it can bring to the fight.
13:31Canada fares no better on the naval front. The US has 440 naval assets,
13:37including 11 aircraft carriers and a terrifying fleet of 81 destroyers and 70 submarines.
13:44Canada's navy is around a sixth of the size. It also has no aircraft carriers,
13:48giving it fewer options for how to use its aerial assets, no destroyers, and only four submarines.
13:54Oh, and the United States has 5,225 nuclear weapons. Canada has none.
14:01It's about as one-sided a conflict as you could have, despite Canada's massive size.
14:06If Trump decides to annex the Great White North, his US military should be able to run roughshod
14:10over the relatively feeble Canadian defense. Canada will be hit hard by its past alliance
14:15with the US. What does it do when the country it trusted to defend it becomes Canada's aggressor?
14:21Perhaps it could call on NATO. Under Article 5 of the NATO Charter, all NATO members are
14:26duty-bound to come to the defense of any singular member who experiences an attack on its own soil.
14:31The US attempt to annex Canada would certainly constitute an attack that would traditionally
14:36trigger Article 5. However, there's the added complication of the US being one of the founding
14:41members of NATO to consider. The question is, how would NATO respond to the attempted annexation?
14:47It's difficult to say one way or the other, but Trump hasn't done the United States any favors
14:52with the Collective Defense Organization in the past. He's constantly criticized NATO members
14:57for not hitting the organization's recommended defense spending target of 2% of Gross Domestic
15:02Product, or GDP, particularly before his second stint as US President. In February 2024, he also
15:08said he would encourage Russia to attack any NATO member failing to hit that GDP target.
15:15Referencing a conversation he had with another NATO leader during a South Carolina rally,
15:19Trump also suggested that the US wouldn't come to the aid of underpaying countries that Putin
15:24targets. He claimed the leader asked Trump if the US would come to their country's aid if they
15:29were attacked. Trump's response was blunt. I said, you didn't pay? You're delinquent? No,
15:35I would not protect you. In fact, I would encourage them to do whatever they want. You gotta pay.
15:40Comments like these have already created a thorny relationship between Trump and many of his NATO
15:44allies. Some who have worked with the US President in the past also believe that withdrawal from NATO
15:49is high on his agenda. That includes former US National Security Advisor John Bolton,
15:55who believes it's highly probable that Trump will try and withdraw the United States from NATO.
16:00Speaking to British outlet LBC, Bolton added that he believes Trump's attempts to move the
16:05spending goalposts is a sign of his intentions. Referring to comments made by Trump on January 8th
16:10that NATO members should be aiming for 5% of GDP spending on defense, Bolton said,
16:15First, Trump said back in his initial term, well, all of these Europeans are not spending 2% of GDP
16:20on defense. Now he's saying you need to spend 5% of GDP on defense. But I suspect there's almost
16:26no country in Europe, maybe the Baltics and Poland and a few others, that will go to 5%.
16:31So in a year when it doesn't happen, Trump will be able to say, NATO is just as worthless as I
16:36always said it was. I'm getting out. What could that mean if Trump does try to annex Canada?
16:41If he withdraws the US from NATO, any attack on Canadian soil would push the rest of NATO's
16:45members into a war with the US. Even if Trump doesn't withdraw, he's said so many inflammatory
16:51things about the organization's members that they may choose to take up arms against the US
16:54anyway to support Canada. If they do, Canada's manpower and equipment disadvantages fade into
17:00the background. Even without the US, NATO has 1.5 million active military personnel.
17:05That version of NATO also has thousands of modern battle tanks, advanced jet fighters,
17:10and equipment which would make it a match for the United States. Plus, a NATO that doesn't include
17:14the US still brings nukes to the fight. The UK and France combined to have an arsenal of 515
17:20nuclear weapons. That may only be roughly a tenth of what the US would bring to a fight over Canada,
17:25but it's still enough to cause some serious damage. But of course, this is just speculation.
17:30The reality may be that Trump never expected Canada to retaliate with its own tariffs.
17:35And now America's president has to deal with an emerging trade war that could have massive
17:39ramifications for the US, Canada, global trade, and an alliance that has stood for well over a
17:44century. But what do you think about Canada's retaliatory tariffs? Will they force Trump to
17:49change his approach to the Great White North? Or are we seeing the start of a trade war that
17:53could intensify into something much worse in the future? Let us know in the comments
17:58and subscribe to the Military Show for all of the latest news about Trump's tariffs.