T he Government of Canada provides an online tool called the Tariff Finder, designed to help suppliers and buyers navigate tariff rates in countries with which Canada has free trade agreements. Its dry, bureaucratic interface is exactly what you’d expect from a system rooted in decades of diplomatic negotiation and strategic economic policy. Exploring the site today feels strangely jarring given the trash talk tariffs have recently attracted.
US president Donald Trump’s looming 25 percent tariff on Canadian imports—which could start as soon as February 1—continues to roil the country. After jetting off to dinner at Mar-a-Lago back in December to talk him out of it, Prime Minister Justin Trudeau stepped in the ring preparing to “punch back.” Ontario premier Doug Ford threatened to cut off energy to US states and mused about barring American alcohol from LCBO stores as former deputy prime minister Chrystia Freeland rallied a “Team Canada” approach, hinting that we may restrict US access to critical minerals and other goods. Foreign Affairs Minister Mélanie Joly has since emphasized Canada’s readiness to retaliate, and the prime minister struck a new council on Canada–US relations. The gloves are off and the elbows are out.
Rising prices and economic uncertainty are serious enough, but the idea of an incoming president wielding tariffs as “economic warfare”—tying them to demands Canada clamp down on drugs like fentanyl and curb border crossings, all while mocking our prime minister as a “Governor” and calling Canada a “51st state”—seems almost too surreal to believe. On the other hand, it’s just as difficult to decouple the outlandish nature of Trump’s threats from their devastating implications for Canada, where more than a fifth of our gross domestic product is tied to trade with the US and $3.6 billion in goods cross the US–Canada border daily. But as Dominic LeBlanc, Canada’s finance and intergovernmental affairs minister, said, “The joke is over.”
Experts warn Trump’s tariffs could hit us hard. The University of Calgary’s Trevor Tombe noted that a 25 percent across-the-board tariff might shrink our economy by 2 to 3 percent. Andreas Schotter of the Ivey Business School estimates around 1.5 million jobs are at risk, while Tombe puts that figure closer to 2.4 million. Oxford Economics is already forecasting a recession. It’s grim.
But there would be costs to Americans too. Seventy-five percent of Canada’s exports go to the US—which means the price of things like natural gas, car parts, machinery, plastics, electricity, wood, aluminum, iron and steel, and agricultural produce could jump as Americans are compelled to pay more to access them. And we have since indicated our intention to respond with retaliatory tariffs on American products—a “Trump tariff tax” on Americans that will similarly raise costs for essential goods. “Florida orange growers, Michigan dishwasher manufacturers and Wisconsin dairy farmers: brace yourselves,” Freeland recently wrote in the Toronto Star. “Canada is America’s largest export market—bigger than China, Japan, the U.K., and France combined. If pushed, our response will be the single largest trade blow the U.S. economy has ever endured.”
Others have speculated that Trump’s threat is an opening salvo that ultimately sets the foundation for trade renegotiation. CUSMA, the Canada–United States–Mexico Agreement, is meant to be renewed in 2026. Trump is pushing to do it earlier. Former advisers to Trump have suggested that his proposed tariffs may not actually become official policy. For instance, Howard Lutnick, nominated as commerce secretary, has reportedly supported using tariffs as a negotiating tool. Similarly, Larry Kudlow, a confidant and former economic adviser to Trump, has suggested that tariffs could offset the cost of Republican tax cuts. With that in mind, the chatter regarding new tariffs is a test, a sort of international dare. And Canada is definitely flinching, as was no doubt intended.
The way we talk about tariffs often feels punitive, shaped by the conditions Trump has now baked into the debate, but that doesn’t alter what they actually are. At its most basic, their purpose is to protect domestic industries and generate revenue. Tariffs are a tax placed on foreign goods coming into a country. They aim to protect local industries by making imports a little more expensive and driving consumers to domestic producers instead. Their role as a deterrent is somewhat ironic in an interconnected world, where we have largely offshored labour and production in exchange for lower prices on the shelf. But they can also prevent the dumping of cheap goods. Finally, they can be leveraged as a diplomatic tool; consider Canada’s economic sanctions on Russia for the war in Ukraine.
The point here is that tariffs are a key part of the fabric of global trade. They are a way to moderate international supply chains while recognizing that not everything can be made in house. Trump’s weaponizing of tariffs into a blunt instrument of coercion and spectacle serves as a reminder that global trade also depends on norms. What we are witnessing is the fragility of modern politics as once-stable alliances start to crumble under Trump’s cooperate-or-else approach. Canada is being dragged into a high-stakes negotiation, but much of the effort is playing out in the chaos of social media’s playground. Meanwhile, Trump is flexing his renewed political clout, all while feigning concern over drug trafficking and migration. We can sketch the economic cost of a potential blanket tariff in policy briefs or on the backs of napkins, but it’s important to recognize this debate is ultimately about power and about how Trump chooses to engage with allies: arbitrarily and on his terms.
The most unexpected twist in the tariff saga is how it has the potential to unify Canada across party lines. The Liberal government’s immediate response to Trump’s threats was to project strength, declaring Canada “strong, smart, and united.” Conservative Party leader Pierre Poilievre also donned his Team Canada jersey, pledging to retaliate against Trump’s tariffs and calling them an “unjustified threat,” a rare alignment that reportedly caught some Fox News pundits off guard (though Danielle Smith and Scott Moe may have missed the memo).
As we scramble to highlight the ways in which the US relies on Canada, we also have an opportunity to brag about some of our strengths. Setting aside the looming economic uncertainty for a moment, it’s refreshing to see political parties rallying around the cause, defending our turf with confidence—even appearing at press podiums wearing “CANADA IS NOT FOR SALE” hats.
But make no mistake: this is a fight. It’s also a preview of policy making under Trump 2.0: a world where his ultimatums are matched only by the frantic response they provoke. This is the great imbalance that the recalibration of tariffs cannot solve. It won’t be fixed by slapping on a new border tax or opting not to impose one. Disorientation will be the levy we pay over the next four years as the US tries to grow its economy while destabilizing others.
