‘We will not hesitate’: Canada prepares to hit U.S. with billions in tariffs

OTTAWA — If U.S. president-elect Donald Trump imposes harsh tariffs on Canada, we’re prepared to respond, Prime Minister Justin Trudeau stated Friday, and his cabinet members say Americans in Washington aren’t fully grasping how the duties would affect the economies of both countries.

We won’t be shy about taking action,” Trudeau said at a meeting of the newly formed Canada-U.S. Relations Council in Toronto. “We will react and let me repeat it, all options are on the table.

The incoming president has vowed to put a 25 percent tax on all goods imported from Canada as soon as he gets back to the White House on Monday.

Foreign Affairs Minister Mélanie Joly is currently in Washington, D.C. for a visit. She had a meeting with U.S. Republican Senate Majority Leader John Thune and other Republicans on Thursday, including Lindsey Graham and James Risch, the chairman of the United States Senate Committee on Foreign Relations. She stated that imposing tariffs would lead to a “trade war” between Canada and the United States.

If we have to hit back, we absolutely will,” Joly informed the media on Friday. “The Americans would be initiating a trade dispute with us, and this incident would mark the start of the most significant trade conflict between Canada and the U.S. in recent history.

They have several options for retaliatory tariffs on standby, awaiting the outcome of whatever decision Trump makes, according to two federal government officials with insider knowledge of the country’s tariff strategy. They must remain silent because they aren’t cleared to make it known publicly.

If Trump sets the tariffs at 25 per cent, Canada is being prepared to impose counter-tariffs worth roughly $37 billion and could also implement additional tariffs worth $110 billion. If the duties are lower, Canada’s response would be much more moderate.

No decision will be made in Ottawa until officials have seen the wording of Trump’s order imposing the tariffs.

Natural Resources Minister Jonathan Wilkinson, who was in Washington this week, said Thursday that the Trump government’s tariff plan isn’t even clear to Republican senators and members of parliament.

Wilkinson mentioned he’s aware of three tariff options on the table: a 25% tariff, a 10% tariff, and a lower duty that increases progressively over time.

There’s been disagreement among the premiers as to how Canada should react if Trump carries out his threats. Most premiers presented a united front following a meeting with Trudeau in Ottawa earlier in the week.

Alberta Premier Danielle Smith stood out from the crowd by opposing the possibility of taxing oil exports.

Former Finance Minister Chrystia Freeland, who announced her intention to run for the Liberal leadership this past Friday, has proposed a dollar-for-dollar tariff retaliation. Prime Minister Trudeau has stated his support for the idea of a retaliatory dollar-for-dollar tariff.

Canadians have been developing their tariff strategy for several weeks, whereas Republican politicians have only just returned to work in Washington.

Joly stated she still hopes tariffs can be avoided by making the argument that they would harm both the Canadian and US economies.

When we’re discussing the tariffs themselves and their effects, people in Washington are often quite surprised,” Joly said Friday. “And when I bring up the consequences of Trump’s tariff taxes on Americans, they’re not only surprised, they’re really concerned.

Economic goods worth $3.6 billion are transported across the Canada-USA border daily. Research conducted by the Canadian Chamber of Commerce warns that implementing 25 per cent tariffs would result in Canada’s gross domestic product falling by 2.6 per cent and the US’s by 1.6 per cent. This scenario would particularly impact various sectors, such as the automotive, agricultural, and energy industries.

“Average Canadians are just becoming aware of this development,” Joly stated.

Bea Bruske, Canadian Labour Congress (CLC) president, expressed the organization’s worry about the effects of tariffs on employment.

“We feel this is a time for across-the-board action where the government, the business community, and workers’ representatives need to join forces to figure out how to deal with the situation,” Bruske said, emphasizing the importance of allowing workers’ voices to be part of those discussions.

The sectors most susceptible to tariffs include manufacturing, mining, the energy sector, agriculture, and forestry.

“Those are the jobs that are really the backbone of our economy across the country, and the different provinces and regions,” Bruske said, noting that job losses in those areas would have a ripple effect on other sectors like retail, education, and health care.

She suggested the need for a “robust social support system” so that “even if there are job interruptions… workers should be able to still participate in the communities they reside in.”

When asked about possible retaliation measures, Bruske said it’s premature to speculate about what they might look like. She stated that countervailing tariffs could be a possibility, but a trade war would be detrimental to employees on both sides of the border.

Bruske mentioned that the Canadian Labour Congress is working alongside the labour movement in the United States to find opportunities for mutual co-operation.

“Many individuals are feeling increasingly stressed about being able to cover their living expenses, and the threat of job losses is just another source of concern for them,” she said.

This story from The Canadian Press was first published on January 17, 2025.

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