Trudeau promises 'very strong' response as Trump renews tariffs threat against Canada
Trudeau says dollar-for-dollar retaliatory tariffs could be a possibility if Trump goes ahead with a trade war
Prime Minister Justin Trudeau said Tuesday Canada will hit back at the U.S. if President Donald Trump goes ahead with punishing tariffs on Feb. 1, promising this country will respond in kind with "robust, rapid" and "very strong" retaliatory measures.
Trudeau said Canada is ready to deploy whatever measures are necessary to try and force Trump to reverse course. He even floated slapping dollar-for-dollar matching tariffs on American products if the U.S. enacts its promised tariff scheme — a program that could result in levies on hundreds of billions of dollars of American imports.
The comments come after a chaotic day for the Canada-U.S. trade relationship.
After his inauguration, Trump held off issuing an executive order to levy tariffs on Canada, only to suggest later in the day he wants a 25 per cent tariff in place in two weeks' time.
Then, he signed a new "America first" trade policy that directs officials to study unlawful migration and fentanyl flows from Canada and other countries and report back by April 1 on possible trade action to resolve what that policy calls an "emergency."
Trudeau told reporters at a special cabinet meeting in Montebello, Que., he was unfazed by Trump's about-face, saying he's come to expect a great deal of "uncertainty" when dealing with this president.
"We've been here before," he said.
Trudeau said Trump is a skilled negotiator and he will "do what he can to keep his negotiating partners a little off balance."
But Canada is a good negotiator, too, Trudeau said, and it's willing to inflict economic pain on the U.S. to get Trump to back down.
While Canada's priority is to avoid the tariffs altogether and foster "a very positive relationship with the U.S.," the country won't roll over in the face of Trump's threats, Trudeau said.
Canada has leverage, says Trudeau
Despite Trump's rhetoric that he doesn't need anything from Canada, Trudeau said if Trump really wants to usher in a "golden age of America" with a booming economy, he's going to need Canadian natural resources like oil, lumber, steel, aluminum and critical minerals to make that happen.
That gives Canada some leverage, Trudeau said.
A 25 per cent tariff would be particularly devastating to Canada. Experts have said just a 10 per cent levy would shave billions of dollars off the GDP and potentially plunge the country into a painful recession requiring government stimulus to prop up the economy.
Trudeau floats dollar-for-dollar matching tariffs
Officials have already drawn up a plan that will levy immediate tariffs on $37 billion worth of American goods if Trump moves against Canada — rising to $110 billion if the president doesn't back down.
Ottawa is also prepared to enact some more severe measures, including a possible oil export ban, if those earlier efforts don't succeed.
Trudeau said on Monday that his government could go even further with its retaliatory tariffs, if necessary.
"Everything is on the table, and I support the principle of dollar-for-dollar matching tariffs," Trudeau said.
"It's something we're absolutely going to be looking at if they move forward," Trudeau said of the Americans. "We are prepared for every possible scenario."
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Liberal leadership contenders Chrystia Freeland and Mark Carney have also endorsed dollar-for-dollar tariffs to punish Trump if he takes a swipe at Canada.
"Dollar-for-dollar retaliatory tariffs by Canada should be a given and they should be aimed where their impacts in the United States will be felt the hardest. Every dollar raised by Canadian tariffs should be used to help support Canadian workers through this fight," Carney said in a statement.
Warning to Canadians
Trudeau warned there will be costs borne by consumers if Canada goes into a trade war to stop Trump from torpedoing the economy. Retaliatory tariffs could push up the price of the many things Canadians buy from the U.S.
"If and when Canada needs to respond with the equivalent tariffs on imports from the U.S., those would be paid by Canadian consumers," he said.
Trudeau said there will be government support to help workers and businesses weather the storm — and he urged people to buy Canadian goods wherever possible to avoid the worst of the potential cost increases.
Trump is threatening these tariffs because he claims Canada is sending drugs and migrants into the U.S.
Speaking late Monday, Trump said Canada is "a very bad abuser" when it comes to the border and his prescribed trade policies will help fix the situation.
Experts say there's a reason why Trump is framing the expected tariffs as a response to an "emergency" drug and migrant crisis — it gives him the leeway to impose tariffs even though the new NAFTA is in place to prevent exactly that sort of trade action.
Trump can claim he's levying tariffs to address national security concerns, thereby unlocking special trade powers that can help usurp a free-trade deal, experts say.
Ottawa has shown a willingness to engage with Trump on the border issue, already announcing a $1.3-billion border package that will result in more personnel and technology to better police the 49th parallel.
Canada also has data on its side.
Figures from U.S. Customs and Border Protection show the agency seized just 19.5 kilograms of fentanyl at the northern border last year, compared to a whopping 9,570 kilograms at the southwestern one.
As for illegal migrants, there's also a huge disparity between Canada and Mexico.
Alberta seeks diplomatic resolution
Still, Alberta Premier Danielle Smith said Ottawa should take Trump's concerns seriously and try to pursue some sort of diplomatic resolution to this trade conflict, and focus on delivering more border measures to appease the new president.
Speaking to reporters from Washington, where she attended inauguration events over the last two days, Smith said she doesn't think retaliatory tariffs will work against Trump. Canada needs to be focused on creating a "win-win" scenario that involves giving the president more of what he wants to get him to back down, she said.
"We do have to be realistic. We're an economy that's one-tenth the size of the Americans'. We are far more reliant on the trade relationship with them than they are with us, so trying for a tit-for-tat tariff war without addressing the underlying issues is not going to end well for Canada," she said.
That puts Smith offside with Conservative Leader Pierre Poilievre who said on Tuesday he supports some unspecified retaliatory tariffs against Trump for his "unjustified 25 per cent tariffs."
Poilievre urged Trudeau to reconvene Parliament right away so that MPs and senators can pass legislation to strengthen the border and "agree on trade retaliation and prepare a plan to rescue Canada's weak economy."
Under Canadian trade law, the government can impose retaliatory tariffs on the U.S. without Parliament's approval.
But Poilievre said MPs should have a say.
"Open Parliament. Take back control. Put Canada First," he said.
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