"Today, the United States launched a trade war against Canada, their closest partner and ally, their closest friend," Trudeau said at a press conference on Tuesday.
"Canadians are reasonable and we are polite, but we will not back down from a fight when our country and the wellbeing of everyone in it is at stake," he added.
Trudeau addressed Trump directly, saying: "Now it's not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do."
The Canadian prime minister said the US government had decided to make the daily lives of Americans more expensive, pointing to the turbulence on stock markets and inflation, which he said was set to rise dramatically.
Trump implemented 25 per cent tariffs on US imports from Canada, as well as Mexico, from Tuesday, sticking to an earlier promise.
Trudeau announced matching 25 per cent tariffs on up to C$155 billion ($A172 billion) worth of imports from the US and said Canada was willing to take further measures to show Trump "that there are no winners in a trade war."
He also criticised Trump's recent diplomatic engagement with Russian President Vladimir Putin, whom he called "a lying, murderous dictator."
Trump hit back in a post on his network Truth Social, once again mocking the neighbouring country's prime minister as "Governor Trudeau" - relegating the country to the status of a US state.
"Please explain to Governor Trudeau, of Canada, that when he puts on a Retaliatory Tariff on the US, our Reciprocal Tariff will immediately increase by a like amount!" Trump said.
China, Mexico and Canada all responded to the new US tariffs by imposing retaliatory measures on imports from the United States.
China announced it was imposing new tariffs on key agricultural imports and imposing further restrictions on US companies.
Mexican President Claudia Sheinbaum announced retaliatory measures including import duties and other steps which she will reveal on Sunday.
"We need to keep calm and think clearly," Sheinbaum said.
The punitive tariffs on Canadian and Mexican imports mark a sharp escalation in trade tensions, raising fears of a North American trade war with unpredictable consequences for the global economy. The announcement sent stock markets tumbling.
In early February, the White House said the tariffs were in response to Canada, Mexico and China allowing illegal drugs to enter the US.
Trump then agreed to delay the planned trade restrictions for at least 30 days after Mexico and Canada made concessions, particularly regarding border security.
Beijing's Ministry of Commerce said that starting on March 10, China will impose a 15 per cent tariff on chicken, wheat, corn and cotton from the US. Other agricultural products, including soybeans, pork and beef, will be subject to a 10 per cent additional duty.
China also warned more US companies would be added to its list of unreliable entities, potentially leading to restrictions or outright bans on doing business in China.
The White House justified the increase on tariffs on China by pointing to the continued smuggling of Chinese-manufactured fentanyl into the US.
Beijing condemned the move, saying that if the US wanted to start a tariff war, trade war or any other war, China would follow through to the end.
More than 80 per cent of Mexican exports go to the US, with thousands of companies and millions of jobs depending on the trade partnership.
32°C