Canadian Prime Minister Justin Trudeau said Monday that Americans “are starting to realize that tariffs on Canadian products would make life much more expensive,” and he said he will respond if Donald Trump decides to go ahead with the measure.
Trump later responded by calling Canada a state and Trudeau a governor.
At an event hosted by the Halifax Chamber of Commerce, Trudeau also said that dealing with Donald Trump on trade issues will be “a little more challenging” than last time, because the Republican’s team has presented much clearer ideas about what which they want to implement immediately after their first election in 2016.
The American president-elect has threatened to impose a 25% tariff on all products entering the United States from Canada and Mexico, unless they stop the flow of migrants and drugs.
“Trump was elected with a commitment to making life better and more affordable for Americans, and I think people south of the border are starting to wake up to the reality that tariffs on everything from Canada would make life much more expensive,” Trudeau said.
Over the weekend, Trump gave an interview to NBC’s “Meet the Press” where he said he cannot guarantee that the tariffs he proposed on major U.S. trading partners will not raise prices for American consumers.
“Let’s not fool ourselves in any way, shape, or form, 25% tariffs on everything going to the United States would be devastating to the Canadian economy,” Trudeau said.
“It would also mean, however, a real hardship for Americans. Americans import 65% of their crude oil from Canada, significant amounts of electricity. Almost all of the natural gas that Canada exports goes to the United States. They depend on us for steel and aluminum. They depend on us for a wide range of agricultural imports. “All those things would become more expensive.”
Trump appeared to respond to Trudeau’s comments with a social media post on Monday night, in which he mentioned Trudeau’s recent dinner at Mar-a-Lago, where some said Trump joked about Canada becoming the 51st state. of the United States.
“It was a pleasure to have dinner the other night with Governor Justin Trudeau of the great state of Canada. I look forward to seeing the Governor again soon so we can continue our in-depth conversations on Tariffs and Trade, the results of which will be truly spectacular for everyone! DJT,” Trump posted on Truth Social.
If Trump follows through on his threat to impose 25% tariffs on everything imported from Mexico and Canada, the price increases that could follow would break his campaign promise to give Americans a break from inflation.
Economists say businesses would have little choice but to pass on the extra costs to consumers, which would sharply increase the prices of food, clothing, cars, alcohol and other goods.
The Produce Distributors Association, a Washington trade group, has said the tariffs will raise prices for fresh fruits and vegetables and hurt American farmers when countries retaliate.
“Of course, just as we did eight years ago, we will respond to unfair tariffs,” Trudeau said.
Trudeau said his government is still weighing “the right ways” to respond, referencing when Canada imposed billions in tariffs in 2018 against the United States in response to U.S. tariffs on Canadian steel and aluminum.
Many of the American products were chosen for their political rather than economic impact. For example, Canada imports just $3 million worth of yogurt from the United States annually, and most of it comes from a plant in Wisconsin, the home state of then-Republican House Speaker Paul Ryan. That product was taxed with a 10% tariff.
“It was the fact that we imposed tariffs on bourbon, Harley-Davidson motorcycles, playing cards, Heinz ketchup, cherries and a number of other things that were very carefully selected because they had a political impact on the president’s party. and his colleagues,” Trudeau said.
Trudeau said that when Trump says things, he means them, but they also know that Trump is trying to create uncertainty and “a little bit of chaos” in democracies.
“One of the most important things for us is not to panic, not to be scared,” Trudeau added.
“Knowing that these would be absolutely devastating means we have to take them seriously, but it also means we have to be thoughtful and strategic.”
Canadian officials have said it is unfair to equate Canada with Mexico.
U.S. customs agents seized 19.5 kilograms (43 pounds) of fentanyl at the Canadian border last fiscal year, compared with 9,500 kilograms (21,100 pounds) at the Mexican border.
Most of the fentanyl that reaches the United States, where it causes around 70,000 overdose deaths annually, is manufactured by Mexican cartels with chemical precursors smuggled from Asia.
In immigration, the United States Border Patrol reported 1.53 million encounters with irregular migrants on the border with Mexico between October 2023 and September 2024. This compares to 23,721 encounters on the Canadian border during that time.
Trump has also claimed that the United States is “subsidizing Canada by more than $100 billion a year.”
On the U.S. trade deficit, Canada’s ambassador to Washington, Kirsten Hillman, told the AP that the United States had a $75 billion trade deficit with Canada last year, but noted that a third of what Canada sells to the United States are energy exports and that prices have been high.
Approximately 60% of US oil imports come from Canada, as well as 85% of electricity imports.
Canada is also the largest foreign supplier of steel, aluminum and uranium to the United States and has 34 minerals and metals that the Pentagon requires and invests in for national security reasons.
Nearly C$3.6 billion (US$2.7 billion) worth of goods and services cross the border every day. Canada is the main export destination for 36 United States states.
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