Tariff threat has loomed large in leadup to today's swearing-in ceremony
The Canadian government and business community are preparing for potential economic turbulence as Donald Trump’s renewed threat of sweeping tariffs takes center stage on his first day back in the White House. Trump has signaled plans to impose 25% tariffs on imports from Canada and Mexico, a move that could have significant implications for the tightly integrated economies of North America.
The tariffs, if enacted, could upend key sectors such as automotive, agriculture, and energy, according to business leaders. Prime Minister Justin Trudeau has indicated that Canada is ready to respond decisively, emphasizing that “everything is on the table.”
Trump has pivoted between justifications for the tariffs, initially tying them to Canada and Mexico’s handling of migration and drug control, but more recently framing them as a response to the U.S. trade deficit with Canada. These mixed messages have added uncertainty to an already tense situation.
Ottawa’s Game Plan
As the federal cabinet convened in Montebello, Quebec, on Monday, government officials reiterated that Canada has prepared a series of countermeasures should the tariffs take effect. Sources familiar with the government’s strategy have indicated that retaliatory tariffs could reach as high as $37 billion initially, with a second round worth an additional $110 billion on the table.
Trudeau has also assembled an advisory council on Canada-U.S. relations to explore options for mitigating the fallout. The council, which includes former premiers, labor leaders, and auto industry representatives, has been instrumental in shaping Canada’s potential response. During a recent meeting with provincial leaders, Trudeau stressed the importance of presenting a united front to the U.S., though not all premiers are aligned.
Alberta Premier Danielle Smith has refused to support the federal government’s “Team Canada” approach, citing concerns over the inclusion of energy exports in potential retaliatory measures.
Despite these differences, Trudeau remains firm on Canada’s stance. “Energy, along with all other sectors, is part of the discussion,” he said during a press briefing.
Economic and Political Ripple Effects
The tariffs could have a profound impact on both sides of the border. Canadian officials, including Foreign Affairs Minister Mélanie Joly, have been working to convince U.S. lawmakers and Trump administration officials of the broader economic repercussions.
“Many of the people we’ve spoken to in Washington were surprised to learn how these tariffs could increase the cost of groceries, home heating, and gas for Americans,” Joly told reporters.
She also warned that Trump’s aggressive trade stance risks sparking a broader trade war, stating on CNN that Canada is “pleading for peace” but will not hesitate to retaliate if necessary.
