A day after announcing a temporary pause on tariffs, U.S. President Donald Trump has threatened new 25% tariffs on Canadian lumber and dairy products, escalating trade tensions between the two countries.
“Canada has been ripping us off for years on lumber and on dairy products,” Trump said Friday in an Oval Office address, criticizing Canada’s tariffs on U.S. dairy imports, which can reach 250%. He pledged to impose reciprocal tariffs “as early as today” or early next week, calling Canada’s trade policies unfair to American farmers.
Canadian Trade Minister Mary Ng dismissed Trump’s accusations as “not true” and called the proposed tariffs “completely unjustified.” She said she learned of the potential measures just before addressing reporters and warned that such tariffs could severely impact trade relations.
Trump’s latest announcement follows his Thursday decision to pause tariffs on Canadian and Mexican products under the USMCA agreement, briefly providing relief to industries reliant on cross-border trade. However, he indicated further trade policy adjustments are forthcoming, suggesting the U.S. may change its approach if necessary.
The uncertainty rattled financial markets, with stocks initially dropping before rebounding after Federal Reserve Chair Jerome Powell presented a positive economic outlook. The Dow closed up 222 points, the S&P 500 rose 0.6%, and the Nasdaq recovered 0.7% after recent declines.
Trump’s trade threats add volatility to an economy already facing slowing job growth, rising inflation, and declining consumer confidence. Industry experts warn that tariffs could further destabilize the market.
The dispute over dairy tariffs has been ongoing, with American dairy farmers arguing that Canada’s high import taxes create an unfair playing field. While a 2023 trade panel ruled in Canada’s favor, U.S. dairy representatives continue to push for changes. Wisconsin Senator Tammy Baldwin criticized the ruling, saying it disadvantages American farmers.
Trump also targeted Canadian lumber, claiming the U.S. has enough timber to meet domestic needs. However, industry analysts warn that new tariffs could worsen the ongoing housing affordability crisis by raising construction costs. Canada supplies about 30% of U.S. softwood lumber, which is already subject to duties of 14.5%.
With trade tensions mounting, businesses and investors remain uncertain about the administration’s next move. While Trump’s hardline stance aims to pressure Canada, experts caution that prolonged disputes could have lasting economic consequences for both nations.
