In 2025, President Trump's aggressive trade war with Canada and Mexico is reshaping North American economics. The U.S.-Canada trade relationship, once a foundation with 75% of Canadian exports streaming south, deals with extraordinary pressure. Trump's tariffs– 25% on Canadian steel and aluminum, escalating to 50%, 25% on automobiles and parts, and 10% on energy exports– are requiring a dramatic financial divorce. Canadian Prime Minister Mark Carney stated the old U.S. partnership "over," indicating a vibrant pivot. Canadian companies are diversifying, with firms like a British Columbia pharmaceutical business and a Montreal steel provider creating new Asian and European ties. Canada's 2024 trade deal with Indonesia, getting rid of 90% of tariffs, and a $2.3 billion Indo-Pacific method targeting 40 nations underscore this shift. Foreign direct financial investment in Canada surged 9% in 2023, while U.S. FDI fell 28%. On the other hand, U.S. customers deal with greater prices for groceries, fuel, and cars and trucks, with Michigan's car market warning of task losses. Canada's GDP grew 2.6% in late 2024, in spite of tariff shocks, while U.S. exports to Canada dropped. As Ottawa builds international alliances with the EU, Japan, and India, it places itself as a steady, rules-based economy. Trump's protectionism threats separating the U.S., while Canada's predictability attracts international investment. This trade war isn't practically tariffs– it has to do with trust, and Canada is winning it.
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