In a major escalation of trade tensions between North American neighbors, Canadian Prime Minister Justin Trudeau plans to hit back with 25% retaliatory tariffs on the U.S. starting Tuesday. These tariffs would affect select U.S. goods worth $107 billion (C$155 billion). The move comes in direct response to U.S. President Donald Trump’s announcement of 25% tariffs on Mexican and Canadian goods, rattling financial markets.
Following Trump’s confirmation, U.S. stocks faced selling pressure on Monday, led by declines in technology, energy, and material sectors. Chipmaker Nvidia tumbled over 8% due to fears of stricter chip regulations, while Amazon (AMZN) dropped more than 3% and Microsoft (MSFT) slid 2.14% amid tariff concerns.
U.S.-Canada Trade War Heats Up
Canada’s retaliatory tariffs, effective from March 4, 2025, target a wide array of U.S. goods, including food items, textiles, and furniture. According to Trudeau’s statement, Canada will impose 25% tariffs on C$30 billion of U.S. goods starting Tuesday, with the remaining C$125 billion set to be taxed in 21 days.
These tariffs could significantly impact U.S. companies with major operations in Canada. For instance, e-commerce giant Amazon serves a vast customer base from Canada, making it a key market for the company’s international sales. Recently, a Leger Marketing survey found that 55% of Canadians have reduced their Amazon orders amid Trump’s decision on tariffs.
US Auto Industry at Risk as Tariff Pressures Mount
On Monday, Trump described his tariff plan as a “very exciting” move for the auto industry, claiming it would be beneficial. He stated that companies could avoid tariffs by building their car plants and other facilities in the U.S.
However, the auto industry has strongly opposed these tariffs, as many automobile companies rely heavily on the North American supply chain for parts and production. As a result, U.S. carmakers General Motors (GM) declined by 3.5% and Ford Motor Co. (F) was down by 1.68%. Interestingly, Ford CEO Jim Farley warned at a February investor conference that a 25% tariff on Mexico and Canada would severely damage the U.S. auto industry, calling it an unprecedented blow.
According to TipRanks, GM stock holds a Moderate Buy rating, while F stock is rated as a Hold. In terms of share price appreciation, GM’s average price target of $59.69 suggests a 26% upside, whereas Ford’s target of $10.56 indicates a more modest 12.5% growth potential.
