Entrepreneur Grant Cardone said on X that President Donald Trump's tariffs on Canada suggest an intent to turn the country into the 51st state. This comment comes as tensions mount between the U.S. and Canada—two neighbors whose economies are deeply connected through robust trade ties.
Economic Crossroads
Despite Trump's Feb. 1 announcement of a 25% tariff on imports from Canada and Mexico—excluding energy products and potash, which faced a 10% tariff—these measures have yet to take effect.
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They have been postponed until April 2 for certain goods under the United States–Mexico–Canada Agreement. Additionally, the planned increase from 10% to 20% on Chinese electronics imports, scheduled for March 3, has been partially implemented, with some exemptions and phased-in measures.
Higher costs are already showing signs of impact. Staples like avocado toast, lox bagels, and maple syrup could soon carry steeper price tags.
With Canada supplying 96% of the salmon and a significant portion of the maple syrup consumed in the U.S., households might notice these price increases sooner rather than later.
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Canada isn't sitting idle. The government plans to scrap internal trade barriers by July 1 in a bid to counterbalance the tariff shock. According to Canadian Prime Minister Mark Carney, this move is designed to trim trade costs by up to 15% and lift economic performance by 4% to 8% by streamlining regulations and setting uniform national standards. Reuters outlines these steps as part of a broader strategy to shield the domestic market from external pressures.
Trade numbers underscore the scale of cross-border commerce. In 2024, Canadian merchandise exports to the U.S. totaled $596.2 billion, while imports from the U.S. came in at $471.3 billion, resulting in a surplus of $124.9 billion. According to data from Statistics Canada, energy products alone contributed $143.7 billion to this surplus.
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The political fallout in Canada is palpable. "In the end, the American people stand to lose from their country's trade action, and that's one of the reasons I am confident there will be a discussion with the right amount of respect and breath," Carney said.
He also laid out plans to fast-track resource projects, including an oil pipeline stretching from Alberta to Eastern Canada.
Economic experts have weighed in on potential long-term effects. The Peterson Institute for International Economics warns that a 25% U.S. tariff could reduce Canada's GDP growth by 1.15 percentage points and significantly increase inflation. With Canadian retaliation, GDP losses could exceed 3 percentage points.
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