TRADE WAR EXPLODES! Trump Threatens 100% Tariffs on Canada Over Shock China Deal!

The North American trade arena just erupted. President Donald Trump has unleashed a stunning threat to impose a 100% tariff on all Canadian goods entering the United States. This came after Canada announced a controversial trade agreement with China, a move quickly labeled a betrayal by Washington.

This sudden escalation threatens to plunge Canada into an unprecedented economic crisis and sends shockwaves across global markets.

Canada's Daring Pivot to China

Just days ago, Canada finalized a significant trade agreement with China. Under this new arrangement, Canada will dramatically reduce its 100% tariff on Chinese-made electric vehicles (EVs) to a mere 6.1%, with an annual cap of 49,000 vehicles. In return, China is expected to lower its retaliatory tariffs on key Canadian agricultural products, including lobster, crab, and canola.

Canadian Prime Minister Mark Carney recently met with Chinese leader Xi Jinping on January 16th, marking the first visit by a Canadian leader to Beijing in eight years. This signaled a clear pivot in Canadian foreign policy, seemingly breaking from alignment with the previous US administration's trade agenda.

Trump Unleashes Fury: "China Will Eat Canada Alive!"

President Trump's reaction was swift and incendiary. He took to social media, blasting Canada's actions. He explicitly threatened Canada with 100% tariffs against all Canadian goods if the deal with China proceeds.

In a series of pointed posts, Trump referred to Prime Minister Mark Carney as "Governor Carney" and warned that Canada was "sorely mistaken" for facilitating Chinese product entry into the US market. The president declared, chillingly, that "China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life." This aggressive rhetoric signals a potential seismic shift in US-Canada relations.

Canada Defiant: Diversification is Key

Despite the severe threats, Canadian officials are standing firm. Prime Minister Carney stated on Sunday that Ottawa's recent dealings with Beijing are "entirely consistent" with Canada's obligations under the CUSMA trade agreement with the United States and Mexico. He affirmed Canada has "no intention" of pursuing free trade agreements with non-market economies like China without prior notification, as required by CUSMA.

Canadian Foreign Minister Anita Anand emphasized that Canada "won't be derailed" in its efforts to diversify trade away from the US. She highlighted that the country has no choice but to push ahead with its strategy to double its non-US exports within ten years. "We need to protect and empower the Canadian economy and trade diversification is fundamental to that," Anand said in an interview. She added, "That is why we went to China, that's why we will be going to India and that is why we won't put all our eggs in one basket."

Economic Fallout and Global Market Jitters

The specter of a full-blown trade war between the US and Canada is sending jitters through global financial markets. Experts fear massive economic consequences, potentially including a $260 billion loss for the US economy and a significant widening of its structural budget deficit due to increased federal spending on compensation programs for affected industries.

• Gold and silver prices have soared, hitting new record highs amid fears of escalating tariffs and US government shutdown worries.

• Global shares mostly dipped on Monday, with continuing uncertainty over US tariff policies contributing to the mixed market performance.

• The Canadian dollar's stability could be tested, as it recently traded for 72.82 cents US, up from 72.47 cents US earlier.

The previous trade war initiated by the United States against Canada and Mexico in February 2025 saw the US impose 25% tariffs on most imports from both countries. This led to Canada retaliating with its own tariffs on American goods.

Impact on Everyday People and Businesses

For ordinary Canadians, the threat of 100% tariffs is terrifying. It could lead to skyrocketing prices for consumer goods, job losses in export-oriented industries, and a severe hit to Canada's overall economic stability. US consumers could also face higher costs for Canadian imports.

The new tariff would greatly increase US duties on its northern neighbor, adding immense pressure to Canadian industrial sectors like metal manufacturing, cars, and machinery. For American businesses, this could mean disrupted supply chains and increased costs, impacting profitability.

What's Next

The coming days will be critical. Will President Trump follow through on his tariff threats, or is this a negotiating tactic? Canada's resolve to diversify trade is clear, but the potential economic cost of defying its largest trading partner is immense. The world watches as this high-stakes economic drama unfolds, with significant implications for international trade and the global economy. The Federal Reserve's upcoming rate decision on Wednesday will also be closely watched for further market indicators.