More tariffs, "And we are just getting started"

A Tale of Two Leaders

Today may have been the most momentous day yet of the second Trump Administration.

Just after midnight, Trump enacted large, blanket tariffs on our two closest trading partners, Canada and Mexico. He also enacted an additional blanket tariff on China.

Canada is not just a close trading partner. Canada is also a close—maybe our closest—ally and friend. All Americans grow up learning about and taking pride in our friendly border—the longest essentially undefended border in the world. Trump has bludgeoned this dear relationship, and I can only hope that the damage is reparable. It may not be, unless Americans can quickly prove that we are worthy of Canadian friendship.

Canada’s outgoing Prime Minister, Justin Trudeau, gave a heartfelt yet blistering press conference this morning. He demonstrated the strength, the resolve, and the unity of Canadians—a unity that Americans can only dream of right now. Before Trump came into office, Trudeau was the definition of a beleaguered politician who had worn out his welcome. The opposing Conservatives, led by the populist, “Canada First” Pierre Poilievre, held a vast polling lead over Trudeau’s Liberal party, largely bolstered by domestic government scandals and simple desire for change.

Since Trump has begun threatening to annex Canada and place crippling tariffs on Canadian imports, the shift in party support has been nothing less than astonishing:

The Liberals are experiencing a rapid upswing, to the detriment of Poilievre’s Conservatives and the NDP, led by Jagmeet Singh. For the record Poilievre also denounced today’s tariffs, as did Singh. The chance that the Liberals win the next election is still slim, but there’s no doubt that Canadians are growing wary.

Meanwhile, Trump’s disapproval ratings are rising, as he loses support for his handling of cost of living, foreign policy, trade and other key issues.

Justin Trudeau: “this is a very dumb thing to do”

Trudeau’s press conference was sharp, yet it also pulled on the heartstrings of this American, at least.

Trudeau opened with the truth: “The United States launched a trade war against Canada, their closest partner and ally, their closest friend.”

Then he announced Canada’s tariff response: 25% against $155B of US goods; $30B immediately and the rest later, to help Canadian businesses prepare. He forthrightly claimed the illegality of the tariffs and noted his intention to file disputes through the World Trade Organization and the US-Mexico-Canada Agreement, a trade agreement that Trump himself signed.

Trudeau demonstrated Canada’s resolve to not be a victim to US bullying: “Our tariffs will remain in place until the US tariffs are withdrawn, and not a moment sooner,” and, “Should these tariffs not cease, we are also in active and ongoing discussions with provinces and territories to pursue several non-tariff measures. Measures which will demonstrate that there are no winners in a trade war.”

With the prototypical Canadian politeness and kindness, Trudeau expressed sympathy for Americans throughout, while highlighting the benefits Americans get from a partnership with Canada. He spoke directly to the American people, not blaming us, but our government: “Your government has chosen to put American jobs at risk […] They’ve chosen to raise costs for American consumers. […] They’ve chosen to launch a trade war that will first and foremost harm American families.”

Trudeau also spoke directly to Trump. “Donald.” He made sure to emphasize the word “big.” And he chastised Trump, like a child: “Donald […] even though you’re a very smart guy, this is a very dumb thing to do.”

As Trudeau turned to Canadians, he emphasized unity and that the Canadian government will support them as much as possible. He acknowledged, “This is gonna be tough, even though we’re all gonna pull together.” He talked about positive measures the government would take to lessen the blow to workers and businesses, including direct benefit and business support. “The federal government and other orders of government will be there for you.”

Trudeau and Canada take Trump’s threats very seriously. As Trudeau said in response to a question about what Trump might want from negotiations: “even the excuse he’s [Trump’s] giving for these tariffs today of fentanyl is completely bogus. Completely unjustified. Completely false. So we actually have to fall back on the one thing he has said repeatedly that what he wants is to see a total collapse of the Canadian economy. Because that’ll make it easier to annex us […] We will never be the 51st state.”

All readers should be clear: our (former) allies are serious. They are sincerely afraid that this could escalate to a dangerous and unstable level, if it hasn’t already. We should not dismiss their fears.

Donald Trump: “And we are just getting started”

The Republicans clamored for Trump’s attention as he entered and took the dais. During the speech, Mike Johnson looked like he was fighting back tears, as if he were finally granted to the opportunity to see his god. The “Dear Leader” vibe was palpable, even through the TV screen.

There was a lot in the speech, but for now I’ll focus on the tariffs.

Trump claims (maybe even believes?) that he is bringing about a “golden age of America;” a “comeback the likes of which the world has never witnessed and will perhaps never witness again.” The second part might be true, but his “golden" may in fact be merely gilded.

Trump is not concerned about tariffs. He loves them. Tonight he said “Tariffs. It’s a beautiful word, isn’t it?”

The speech held no evidence that Trump will be willing to let up on tariffs. He touted upcoming global tariffs on aluminum, copper, steel, and lumber. He has no intention of backing down from a trade war, and instead plans to ramp it up: “April 2, reciprocal tariffs kick in, and whatever they tariff us, other countries, we will tariff them. That’s reciprocal, back and forth. Whatever they tax us, we will tax them. If they do non-monetary tariffs to keep us out of their market, then we will do non-monetary barriers to keep them out of our market.”

Trump didn’t have the sympathy for his citizens that Trudeau demonstrated. Although Trump did acknowledge that Americans will feel pain, his response was a lot more careless and lacked any ideas for mitigation of harm: “There will be a little disturbance, but we’re ok with that. It won’t be much.”

Most infuriatingly, Trump claimed that "Our new trade policy will also be great for the American farmer.” This is hard to believe, and Republicans in Congress clearly do not believe it, as they are already concerned for agriculture in their districts and states. Trump did acknowledge some harm, but again, only lightly, dismissively: “may be a little bit of an adjustment period. […] Probably have to bear with me again. […] But our farmers are going to have a field day right now. So to our farmers, have a lot of fun. I love you too. I love you too.”

It might be impossible to further understate the harm that will come to American farmers from these tariffs. It’s true that the US is at a trade deficit with Canada with respect to agriculture, but it’s also true that since the US has enacted trade agreements with Canada, bilateral exchange of agriculture products has grown (chart from USDA):

According to this USDA data, since 1990, the dollar value of US agricultural exports to Canada have increased by over 400%. (Inflation over the same time period was 149%, so those are still significant gains.) US farmers may lose billions of dollars from these Trump tariffs.

Perhaps the most striking difference between Trudeau’s press conference and Trump’s speech was that Trudeau both promised and called for unity—that Canadians would bear the brunt of the tariffs fairly. Trump meanwhile, relished in stoking division throughout the speech, at one point declaring “Radical left lunatics” while pointing at the seated elected Democratic Representatives and Senators.

What are the tariffs and why?

Trump claimed the authority to issue the tariffs under the International Emergency Economic Powers Act (50 U.S.C. §§ 1701-1702).

The actual Executive Order for the tariffs (which amends a Trump order from February) has not yet made it to the Federal Register—that’s how quickly and capriciously this was done. In order to implement the policy, however, US Customs and Border Patrol rushed an implementation policy into the Public Inspection “early” version of the Federal Register. (Similar executive orders and their corresponding implementation policies are in the same states of publication for the tariffs on Mexico and the additional tariffs on China.)

The implementation memos set the time for the duties to begin at 12:01 a.m. eastern standard time on March 4, 2025. The implementation calls for a 25% tariff on all products from Canada, except for energy and energy materials (e.g., crude, uranium, natural gas, coal, critical minerals), with some exception for printed informational materials (e.g., postal materials, film, posters, publications), "donations to relieve human suffering,” and personal items in baggage. Despite the small exceptions, this can be considered a blanket tariff on Canadian products. The tariffs on Mexico are the same, but without the reduction to 10% for energy products.

As Trump proclaimed at the beginning of his speech tonight “And we are are just getting started.” There is very little evidence he will back off on tariffs. Here’s a table from the New York Times showing what Trump has planned, most of which he touted in his speech:

One of Trump’s primary justifications for the Canadian and Mexican tariffs is that the US needs to be protected from fentanyl entering the United States. How the imposition of tariffs might lead to fentanyl reduction is left unclear, unless the idea is simply to punish Canada and Mexico until they implement the enforcement policies Trump dictates.

Unfortunately, it’s not even clear what Trump wants them to do. Canada has already agreed to spend over a billion dollars on additional border security, named a fentanyl czar, and more. Trudeau said in his speech “We did everything we promised. We stuck to our word. And we did it because we believe in working together to protect our citizens.”

Derek Holt, an economist from Scotiabank, said Trump and Commerce Secretary Lutnick are “lying through their teeth about fentanyl.” The drug seizure statistics from US Customs and Border Control show that much less than a pound of fentanyl was seized at the northern US border in January 2025. Canada is trying to show that it is combating fentanyl—possibly to placate Trump—but it’s clear that there just isn’t that much: they confiscated 20 pills and another 20-some grams so far this February.

What will be the effects of tariffs?

I imagine higher prices. That’s generally the case. Inflation and contraction as we lose access to the global market: stagflation.

Tonight, in his speech, Trump touted the drop in the 10-year Treasury bond interest rate. “And today, interest rates took a beautiful drop, big beautiful drop — it’s about time.”

As James Carville noted to Tim Miller on today’s episode of the Bulwark main podcast: “Easiest way to lower interest rates is to start a goddamn depression.”