Trump Proposes 25 Per Cent Tariff On All Canadian Goods
Photo Credit: Tireé Du Compte via Justin Trudeau/X
US President-elect Donald Trump has promised to impose a 25 per cent tax — better known as a tariff — on all trades with Canada, sparking concern in Canada’s political sphere.
Trump announced these plans in a Nov. 25 post to Truth Social, claiming the tariff will come into effect on Jan. 20, through an executive order, and remain in place, “until such time as Drugs, in particular Fentanyl, and all illegal aliens stop this invasion of [America].” He continued that “both Mexico and Canada have the absolute right and power to easily solve this long simmering problem.”
Addressing immigration and the flow of illicit drugs across the border has long been a pillar of Trump’s campaign, and he had previously threatened additional tariffs against Mexico in 2019 while negotiating an immigration enforcement deal.
This recent tariff announcement sparked concern in Canada, Mexico, and the US. In a recent interview with Bloomberg, billionaire Bill Gates said that he expects Trump’s proposed tariffs will undercut economic growth and reduce innovation.
Mexican President Claudia Sheinbaum wrote to Trump to express her concern for an escalating trade war. “One tariff will follow another in response and so on, until we put our common businesses at risk,” she wrote.
Similar effects will likely be felt by Canada. Every day, US$3.5 billion worth of goods cross the Canada-US border, accounting for 60 per cent of Canada’s total international trade. According to analysts at the University of Western Ontario (UWO), Trump’s proposed tariffs — and their hampering of cross-border trade — could put 1.5 million jobs at risk, and result in a GDP contraction of around 2.5 per cent.
Industries that rely heavily on the cross-border supply chains that the proposed tariffs threaten — including the automotive, energy, forestry, and machinery sectors — will be particularly affected.
The automotive sector in particular would suffer, as 20 per cent of its inputs involve cross-border trade. UWO analysts also predicted that the increased supply costs for manufacturers will be passed on to consumers.
Howard Lutnick, Trump’s proposed appointee for commerce secretary, could assist Canadian officials’ in their attempts to reverse the steep tariffs. According to CBC, Lutnick wishes for the tariffs to serve two purposes. One will be focussed primarily on specific industries, and the other is simply to use the threat of these taxes as a show of force. His tone continues to shift, however, and he recently spoke about tariffs on Anthony Pompliano’s podcast. "You've got to tariff the rest of the world. Keep them the heck out. Bring the manufacturing back here,” stated Lutnick.
Another aspect of the US and Canada’s relationship has come into focus following Trump’s win: free trade.
During his last presidency, Trump renegotiated the long-standing North American Free Trade Agreement (NAFTA), in favour of the United States-Mexico-Canada Agreement (USMCA), which will be up for review in 2026.
When addressing USMCA, Trump focused on the narcotics issue, saying, “they smuggle this stuff in. They don't pay anything. We're going to have very strong language on that.”
Trudeau spoke about these negotiations at an Oct. 11 news conference. “We've done this before; we can do it again if we need to [...] We'll do it by putting Canadian interests first and foremost, as we have every other time,” he said.
Following US President Joe Biden’s election, Trudeau hasn’t shied away from voicing disdain towards Trump. In the past year, Trudeau has said Trump is “an assault on democracy,” and that a Trump presidency “wasn't easy the first time, and if there is a second time, it won't be easy either.”