Canada is considering potential retaliatory tariffs on certain U.S. products in response to President-elect Donald Trump's threat to impose tariffs on Canadian goods. Trump has warned of a 25% tax on all products entering the U.S. from Canada and Mexico if they do not address issues related to drug and migrant flows across borders.
A Canadian government official revealed that preparations are underway to identify items for possible tariffs in retaliation, emphasizing that no final decisions have been made. In the past, when Trump imposed higher tariffs, other countries responded with their own retaliatory measures.
For instance, Canada imposed billions of dollars in duties against the U.S. in 2018 in response to new taxes on Canadian steel and aluminum. The selection of products for tariffs often had political significance, such as targeting yogurt from Wisconsin and whiskey from Tennessee and Kentucky.
Despite the disparity in border issues, Trump has lumped Canada together with Mexico in his tariff threats. Canadian officials express willingness to collaborate with the U.S. to address concerns and are concerned about potential repercussions of mass deportations.
While Trump has raised concerns about fentanyl from Mexico and Canada, the quantities seized at the Canadian border are significantly lower than those at the Mexican border. Canadian officials argue that their country is not the primary source of the problem and stress the negative impact of tariffs on both nations.
Canada plays a crucial role in the U.S. economy, being the top export destination for 36 states and facilitating billions of dollars in cross-border trade daily. The country is a major supplier of energy, steel, aluminum, and critical minerals to the U.S., with significant implications for national security.
Deputy Prime Minister Chrystia Freeland highlighted Canada's importance in the U.S. energy supply chain. Trump's pledge to reduce energy bills could face challenges if tariffs are imposed on Canadian oil imports, which accounted for a substantial portion of U.S. oil supply in recent years.
Prime Minister Justin Trudeau is convening an emergency meeting with provincial leaders to discuss potential trade strategies with the U.S. that exclude Mexico. Meanwhile, Mexico is also preparing a list of retaliatory tariffs should the situation escalate.
