Canada has hit back at the United States with retaliatory tariffs of 25 percent. Canadian Prime Minister Justin Trudeau has accused Trump of wanting to ruin the Canadian economy and said Canada would challenge US measures at the World Trade Organization. Dan Williams reports from Montreal.  

After months of uncertainty, the threat of tariffs has become a reality, and a continental trade war has begun. 

This time, there would be no last-minute reprieve like there was a month ago. A 25% U.S. tariff on most Canadian goods are now in effect, with a 10% tariff on Canadian energy products.

In response, Canada hit back with a retaliatory tariff on an initial 30 billion dollars' worth of U.S. goods, and in 21 days, a further 125 billion dollars in U.S. goods will be hit.

Canada's Prime Minister Justin Trudeau says he will do everything in his power to protect his country's jobs and businesses.

JUSTIN TRUDEAU Canadian Prime Minister "The United States has launched a trade war against Canada. Its closest partner and ally, its closest friend. Canadians are reasonable, and we are polite, but we will not back down from a fight, not when our country and the wellbeing of everyone in it is at stake. This is a very dumb thing to do."

The province of Ontario is also taking action, imposing a 25% tariff on electricity it sends to three U.S. states – Minnesota, Michigan, and New York.

Experts predict the trade war impact on the Canadian economy will be severe. 

While many industries, such as auto, are deeply integrated, with complicated supply chains created over decades. There are fears that some factories could be forced to close within a week. 

DAN WILLIAMS Montreal "A further escalation is already locked in. Starting on March 12, the U.S. will impose tariffs on all steel and aluminum exports to the U.S., including those from Canada, while further tariffs on agricultural goods and lumber are also looming."

And there's more. After Canada announced retaliatory tariffs, U.S. threatened to match it. U.S. President Trump said Washington's "Reciprocal Tariffs will immediately increase by a like amount."

For locals here in Montreal, there is a sense of anger and concern. 

"I think it's mostly fear and incomprehension between why they are starting this. It will cost jobs, money, and there's no benefit for either country."

"It will impact the consumer first and foremost. Make everything more expensive. I think on both sides of the border. Even though it will hurt us more than the U.S. It will hurt our dollar, making it again more expensive. Adding inflationary pressure to us. I don't think it is the way to do business with your largest trading partner." 

Canada and the U.S. are now in a full-blown trade war. 

Businesses, industries, and residents on both sides of the border, are about to discover just how damaging these latest developments will be.

Dan Williams, CGTN, Montreal.