(NewsNation) — An impending trade war between Canada and the United States has been temporarily averted, Prime Minister Justin Trudeau announced Monday after his country agreed to border security measures with the United States.
Trudeau and President Donald Trump talked by phone at 3 p.m. ET, and afterward, Trudeau said Canada will spend $1.3 billion to reinforce the U.S.-Canadian border with new helicopters, technology and personnel to target fentanyl trafficking, among several measures.
“In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering,” Trudeau said on X. “I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million.”
Trump offered his own comments on social media, saying, “As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that. I am very pleased with this initial outcome.”
The news of the agreement came hours after Mexico agreed to a similar plan to appease the Trump administration on border security to stave off threatened U.S. tariffs on imports. As with Mexico, the U.S.-Canada truce is good for 30 days.
Canada had begun preparing a host of retaliatory tariffs of its own on U.S. imports to counter the 25% tariffs Trump had threatened on many of its goods entering the United States (Canadian oil would have been subjected to smaller, 10% tariffs).
More than 60% of Canada’s production is exported to the U.S., and 60% of the oil that the US imports comes from Canada, which could have meant higher prices at the pump, 30 to possibly 70 cents a gallon.
Trump has been very clear that he intends to continue to use his strategy of tariffs to try and broker the kind of deals that he’s looking for on some of these issues, particularly immigration.
The White House is confident in that strategy because 77% of exports from Mexico go to the United States. For Canada, 75% of its exports come to the U.S. The U.S. relies on the Mexican and Canadian markets but to a much lower percentage (Mexico, 11% and Canada, 12%).
Nevertheless, the president has acknowledged that there could be some pain that some consumers would be feeling if these tariffs do come to fruition.
The Tax Foundation estimates that the tariffs, if implemented on paper as they are right now, would shrink economic output by 0.4% and increase taxes by $1.2 trillion from 2025 to 2034, which would come to about $830 in taxes per US household in 2025.
Following Trump’s criticism of the European Union and the threat of tariffs against the body, European leaders have rebuked it and called for unity.
“I think that we have to do everything to avoid this totally unnecessary and stupid tariff wars or trade wars,” Polish Prime Minister Donald Tusk told reporters on Monday.
Lithuanian President Gitanas Nauseda said: “First of all, we have to should stay united. No matter (if we are) talking about economic tariffs, we are talking about Greenland or other issues, we have to stay united.”
