Justin Trudeau has called an emergency meeting with provincial premiers across Canada after the US president-elect, Donald Trump, threatened a 25% tariff on the United States’ northern neighbour.
Trump posted on social media that he would “sign all necessary documents” to charge Mexico and Canada a 25% tariff on all goods products coming into the United States, adding the levy would remain in place until “such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!”
The Canadian prime minister said on Tuesday he had held a “good” conversation with Trump shortly after the social media post, working to tamp down fears of an immense economic hit to Canada. He did not say if Canada would impose retaliatory tariffs, as it did during a previous round of trade hostilities during Trump’s first presidency.
“We talked about how the intense and effective connections between our two countries flow back and forth,” he told reporters. “We talked about some of the challenges that we can work on together.”
Given the United States, Canada and Mexico renegotiated a trade pact in 2018 and have deeply intertwined supply chains, a levy of 25% would prove devastating to Canada’s economy. The United States remains Canada’s biggest trading partner, with nearly C$600bn in goods exported to the US last year.
Canadian ministers reacted with measured skepticism over the key claims made by Trump on immigration and drug trafficking.
While a small but growing number of migrants are using Canada as a way into the US, far more people enter through Mexico. Canada’s immigration minister, Marc Miller, likened the 23,000 interceptions by US officials at the northern border last year to a “significant weekend at the Mexico border”, where 1,530,523 “encounters” were recorded last year.
When it comes to the movement of fentanyl across the continent, so little enters the US through its northern border that the US Drug Enforcement Administration (DEA) does not even mention Canada in a report from 2020, instead citing Mexico, China and India.
“The amount of fentanyl that crosses the US-Canadian border is basically homeopathic!” wrote Toronto-based journalist John Michael McGrath on X, critiquing people who “sanewash” Trump’s demands. “This isn’t a serious demand! You don’t have to be stupid in public!”
But the rightwing premier of the oil-rich province of Alberta said Trump had valid concerns over illegal activities at the shared border.
“We are calling on the federal government to work with the incoming administration to resolve these issues immediately, thereby avoiding any unnecessary tariffs on Canadian exports to the US,” Danielle Smith said in a social media post.
“The vast majority of Alberta’s energy exports to the US are delivered through secure and safe pipelines which do not in any way contribute to these illegal activities at the border,” said Smith, whose relations with Trudeau are icy.
For Trudeau, the tariff saga is likely to revive bitter memories of the trade feud with the US during Trump’s first term, when Canadian officials worked to minimize damage to the prized relationship with the US. At one point, Trump said he was “very unhappy” with the negotiations, singling out Canada’s chief negotiator, the then foreign minister Chrystia Freeland, who now serves as finance minister and deputy prime minister.
The threat of Trump’s tariffs pushed Canada’s main stock exchange down on Tuesday and Candace Laing, the head of Canada’s chamber of commerce, warned that “being America’s ‘nice neighbour’ won’t get us anywhere” in a sign of the potential shift in relations between the longtime allies.
“To [Trump], it’s about winners and losers – with Canada on the losing end,” said Laing in a statement on Tuesday. “Canada’s signature approach needs to evolve: we must be prepared to take a couple of punches if we’re going to stake out our position. It’s time to trade ‘sorry’ for ‘sorry, not sorry.’”
Trevor Tombe, an economist who authored a report on the consequences of US tariffs on Canada’s economy, warned a recession was likely if Trump followed through on the 25% tax.
Canada’s premiers have also warned a trade war would cause immense damage to their respective economies. Trudeau said provincial leaders will meet on Wednesday in an emergency meeting, calling for a “Team Canada” approach.
The Ontario premier, Doug Ford, who oversees Canada’s largest provincial economy, called Trump’s threats “unfair” and said it was “insulting” to compare Canada to Mexico when it came to immigration and potent drugs.
“It’s like a family member stabbing you right in the heart,” Ford told reporters Tuesday. He also warned that if the president makes good on his promise, Canada might have little choice: “We have to retaliate.”
