The 25% tariffs on Canadian and Mexican goods, and a separate 10% tariff on all other imports, may cause prices on around a quarter of all consumer spending to rise 0.81% if businesses pass along half the costs, or 1.63% if the costs are fully transferred, according to a Federal Reserve Bank of Atlanta study.

Trump's reaction came after Trudeau lashed out at the US President, saying his new tariffs on Canadian imports, which came into effect on Tuesday, were "a very dumb thing to do".

United States President Donald Trump doubled the tariff on Chinese imports, bringing that rate to 20%. China retaliated by announcing 15% tariffs on various imports from the US.