The trade war of 2025 didn't just happen in boardrooms. It happened in grocery aisles and at construction sites. If you felt the price of a dishwasher or a bag of oranges jump last year, you saw the fallout of the most aggressive trade standoff between Canada and the U.S. in recent memory.
Basically, Chrystia Freeland—who was then leading the charge as Deputy Prime Minister—had a very specific, very aggressive playbook. She wasn't just looking for a "tit-for-tat" tax on steel. Honestly, her strategy was designed to be "precisely and painfully targeted." She wanted to make sure American voters in key swing states felt the heat so they’d call their representatives and tell them to back off.
The $200 Billion Poker Game
Freeland's plan to retaliate against Trump's tariffs was centered around a staggering number: $200 billion. That was the value of the "hit list" she proposed. While the Canadian government eventually settled on a Phase 1 retaliation of about $30 billion in March 2025, the threat of that $200 billion list was the real weapon.
You've probably heard of "surgical strikes" in a military sense. This was the economic version. Freeland specifically called out:
- Florida orange growers: To put pressure on a state Trump cares deeply about.
- Wisconsin dairy farmers: To hit the heart of the "Rust Belt."
- Michigan dishwasher manufacturers: Targeting the industrial base of a critical swing state.
It wasn't just about money. It was about psychology. Freeland famously said, "Donald Trump is using uncertainty to unsettle Canadians. We must do the same." She wanted U.S. exporters to stay up at night wondering if their specific business was next on the chopping block.
Procurement: The Nuclear Option
One part of Freeland's plan that actually shocked trade experts was her proposal to ban American firms from Canadian government contracts.
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Think about that for a second.
Most trade wars are fought with import taxes (tariffs). But Freeland wanted to go further. She suggested a "Buy Canada" policy that would effectively block U.S. companies from bidding on federal procurement projects, with the exception of defense. If you were an American company trying to build a bridge or sell software to the Canadian government, you’d be out of luck.
Observers like Marcia Mills from the Fasken law firm pointed out how "extreme" this was. It would have fundamentally changed how Canada buys goods and services. While it was a huge talking point during her bid for the Liberal leadership, it proved difficult to implement fully because of existing trade treaties and the sheer lack of non-U.S. suppliers for certain high-tech goods.
Did it actually work?
Kinda. The "doomsday" scenario where the Canadian economy would shrink by 2.6% didn't fully materialize, but it wasn't a clean win either.
By late 2025, Canada had actually removed many of its counter-tariffs on things like coffee and consumer goods, but kept the 25% "reciprocal" tariffs on steel, aluminum, and autos. Why? Because Trump kept the pressure on those specific sectors under "Section 232" national security claims.
It’s a weirdly integrated mess. In April 2025, Canada slapped 25% tariffs on U.S.-made vehicles that didn't meet CUSMA (the trade deal) requirements. This was a direct response to Trump's "Liberation Day" tariffs.
The result? Some companies just gave up on the U.S. supply chain. We saw:
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- Grocery stores switching to local Canadian produce.
- Manufacturing sourcing steel domestically to avoid the 25% surtax.
- Liquor boards (like the LCBO in Ontario) pulling American products off the shelves as a symbolic and economic move.
What most people get wrong
People think the trade war was just about the 25% number. It wasn't. It was about the "de minimis" thresholds—the amount you can buy online without paying duty. In August 2025, the U.S. effectively killed the $800 exemption for low-value shipments. That hit small businesses and online shoppers harder than any headline-grabbing steel tariff.
Freeland's strategy was also about looking for friends elsewhere. This is why we've seen the recent pivot toward China. Prime Minister Mark Carney’s recent deal to reduce tariffs on Chinese EVs in exchange for canola and pork access is basically a direct result of Canada realizing it can't rely solely on the U.S. market anymore.
Actionable insights for 2026
The trade war isn't over; it's just changed shape. If you're running a business or managing a household budget, here is what you need to do:
Diversify your suppliers immediately. If your business relies 100% on U.S. imports, you are a sitting duck. Even if tariffs are "paused" today, the 2026 CUSMA review means they can come back with a tweet. Look at Mexican or European alternatives.
Watch the "Rules of Origin." Over 89% of Canadian imports now claim USMCA/CUSMA exemptions. If you don't have the paperwork to prove your goods are "North American," you're going to get hit with the baseline 25% tariff.
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Hedge your currency. The loonie has been a rollercoaster because of these trade threats. If you're buying in USD, talk to your bank about forward contracts to lock in rates.
Focus on "Buy Canadian" procurement. If you are a contractor, the government's shift toward domestic suppliers is your biggest opportunity. The procurement bans Freeland talked about might be "extreme," but the policy "nudge" toward Canadian firms is real and it's staying.
The strategy of "painfully targeted" retaliation was meant to end the trade war quickly. Instead, it seems to have ushered in a permanent era of "managed trade" where nothing is ever truly duty-free.