Canada is preparing to strike back hard with retaliatory tariffs if Trump starts a trade war
CNN
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Canada is preparing to retaliate with an exhaustive list of tariffs on American goods if President-elect Donald Trump follows through with his plans to add a steep 25% import tax on Canadian goods, people familiar with the matter told CNN. The preparations show how raising tariffs could kick off a trade war that will ultimately raise prices on a number of consumer goods around the world.
Canadian officials are working on a list of dozens of American products that the United States exports to Canada, targeting items that both send a political message and inflict a reasonable amount of economic damage, two sources said.
Included in the list of items considered for tariffs are ceramic products, steel products, furniture, certain alcoholic beverages like Bourbon and Jack Daniels whiskey, orange juice and pet food, among other goods, the people familiar with the plans told CNN. American energy exports are also on the list, and, as a last resort, Canada could levy a tax on the energy products Canada exports to the United States.
But the sources cautioned that nothing has been decided yet, and the list could ultimately change or not be imposed at all.
"I think we have to be ready," said Melanie Joly, Canada's foreign minister, during a press briefing in Ottawa Friday, as she was going into a cabinet meeting to discuss the list of retaliatory tariffs.
"I think that when President Trump talks, we listen, and we need to take him very seriously," Joly said, adding that it was important for the president-elect and the people advising him to know there would be consequences if he imposes tariffs on Canadian products and that Canada has "leverage."
The tariffs could deal a blow to Canadian businesses, which are preparing for a trade war with the United States, according to Goldy Hyder, CEO of the Business Council of Canada. Hyder told CNN that his membership, which includes Canada's top CEOs, have only recently been consulted by the government and are being asked for input on retaliatory tariffs.
"We need to carefully articulate how we would respond," Hyder said. "Some have said we should just simply mirror their tariffs, others have said we should be more temperate in our response to get their attention, others have said we should ‘swing big' and respond with great strength."
Hyder told CNN that Canadian business leaders have been preparing for a Trump presidency for nearly a year, but he noted that the implications of each strategy are still being analyzed.
A budding trade war
The announcement seemed designed to show that Ottawa is unafraid to get into a full-blown trade war, one that would deliver real economic pain to US workers, firms and allies of Trump.
Canadian Prime Minister Justin Trudeau announced plans to resign earlier this week, following a mounting set of crises, including tariff threats from Trump.
As Canada has faced an intensifying political crisis, Trump has piled even more pressure on the longtime US friend and ally.
Trump has vowed to impose 25% tariffs on Canada on his first day in office unless Ottawa addresses his concerns about the flow of illegal drugs across the border.
Trump has argued that the best way for Canada to avoid the pain of US tariffs would be to join the United States.
"If Canada merged with the US, there would be no Tariffs, taxes would go way down, and they would be TOTALLY SECURE from the threat of the Russian and Chinese Ships that are constantly surrounding them," Trump said in a Truth Social post on Monday.
Canada is the United States' largest trading partner. The United States imported $419 billion worth of Canadian goods in 2023, including everything from lumber and cement to cars and minerals. Canada is also the largest source of foreign oil into the United States.
During a press conference on Tuesday, Trump would not rule out using "economic force" to make a merger with Canada possible and said the United States doesn't "need" anything made in Canada.
"They have a very small military. They rely on our military. It's fine, but they've got to pay for that," Trump said.
