Canada is considering retaliatory tariffs on U.S. goods as a countermeasure to President-elect Donald Trump’s threat to impose a 25% tax on all imports from Canada and Mexico. A senior Canadian official confirmed the government is preparing for various scenarios, though no final decisions have been made.
Trump issued the tariff threat earlier this week, citing concerns over illegal drugs and migration at the northern and southern U.S. borders. While the bulk of his remarks targeted Mexico, Canada has been grouped into his broader trade policy agenda, causing alarm in Ottawa.
Trump’s Shift on Mexico
On Wednesday evening, Trump announced on Truth Social that he had a “wonderful conversation” with Mexican President Claudia Sheinbaum, who reportedly agreed to enhance migration controls through Mexico. Trump celebrated the development, stating it would “go a long way toward stopping the illegal invasion of the USA.”
Despite this apparent progress, the impact on Trump’s tariff plans remains unclear.
Canada’s Preparedness
In Canada, officials are crafting potential responses should Trump’s tariff threats materialize. These measures could mirror the strategic retaliatory tariffs implemented during Trump’s first term. In 2018, Canada imposed duties on U.S. goods such as whiskey and yogurt, targeting politically sensitive regions like Kentucky and Wisconsin.
Deputy Prime Minister Chrystia Freeland emphasized the need for a unified national strategy. “Now is really a moment for us not to squabble amongst ourselves,” she told provincial leaders during an emergency virtual meeting.
Prime Minister Justin Trudeau echoed the sentiment, stressing the importance of cooperation among Canada’s provinces and territories to address the potential trade crisis.
Economic Stakes
The economic relationship between Canada and the U.S. is deeply intertwined, with approximately $3.6 billion Canadian ($2.7 billion USD) in goods and services crossing the border daily. Canada is the largest supplier of U.S. crude oil, electricity, steel, aluminum, and uranium, making the potential tariffs a significant threat to industries on both sides of the border.
Provincial leaders have urged Trudeau to negotiate a bilateral trade deal with the U.S. that excludes Mexico, a move aimed at isolating Canada from Trump’s broader concerns about migration and drug trafficking.
Migration and Drug Concerns
Trump’s focus on fentanyl and illegal migration has drawn criticism from Canadian officials, who argue that Canada’s contributions to these issues are negligible compared to Mexico. U.S. customs data shows 43 pounds of fentanyl were seized at the Canadian border last fiscal year, compared to 21,100 pounds from Mexico. Similarly, arrests at the Canadian border totaled 23,721 over the past year, far fewer than the 56,530 arrests at the Mexican border in October alone.
Next Steps
The Canadian government remains hopeful that diplomatic engagement can prevent a trade war, but preparations for retaliation are underway. Mexico is also considering its own list of tariffs should Trump’s administration proceed with its plans.
Freeland stressed the gravity of the situation, noting the potential for severe economic repercussions on both sides. “I don’t want to minimize for a moment the gravity of the challenge we now face,” she said.
As Canada braces for potential trade tensions, the stakes remain high for one of the world’s largest bilateral trade relationships. Both countries stand to lose if negotiations fail and tariffs are imposed.