How Canada Averted Trump’s Tariffs, for Now

RCMP officers approach one of the force's newly-acquired Blackhawk helicopters for patrolling the Canada-U.S. border. RCMP handout

News Analysis

Canadian cabinet ministers had repeated in recent months that the tariff threat from U.S. President Donald Trump had to be taken seriously, but somehow their efforts to mount a response addressing his border concerns fell short.

It now appears all the initiative needed was a few tweaks, amid a context of intense trade war fears.

Ottawa’s initial $1.3 billion plan to bolster border security, presented in mid-December, seemingly didn’t resonate with Trump. It includes the leasing of two Blackhawk helicopters to patrol the boundary, and the deployment of other new surveillance assets and detector dog teams.

After saying in November that 25 percent tariffs would be imposed on Canada and Mexico if they didn’t stop illegal migration and drug smuggling into the United States through their borders, Trump followed through on Feb. 1 with an executive order.

Prime Minister Justin Trudeau announced immediately afterward that Canada would impose $155 billion in retaliatory tariffs. “Our border is already safe and secure, but there’s always, always more work to do,” Trudeau said on Feb. 1. He said the plan is already showing results, “because we too are devastated by the scourge that is fentanyl ... As neighbours, we must work collaboratively to fix this.”

With Trump imposing tariffs and overlooking the plan, it appeared his threat was now disconnected from border concerns, making him ever more unpredictable for Ottawa.

But then came the morning of Feb. 3, with Trump and Mexican President Claudia Sheinbaum announcing they agreed Mexico would send 10,000 soldiers to the U.S. border to stem the flow of illegal drugs and migrants. Sheinbaum added the United States has agreed to help mitigate “high-powered” weapons from entering Mexico.

This agreement putting a hold on tariffs for 30 days, while the two countries negotiate, suggested Trump was still open to striking a deal with Canada.

This materialized in the afternoon of Feb. 3, after a second call during the day between Trump and Trudeau.

The two leaders announced U.S. tariffs would be delayed for 30 days and Trudeau announced new elements to the border plan. Those include committing to appointing a “Fentanyl Czar,” designating drug cartels as terrorist organizations, and signing a new intelligence directive on organized crime and fentanyl backed by a $200 million envelope.

Trump had also directed his officials to start designating cartels as terrorists with one of his first executive orders.

Trudeau also said there “are and will be” nearly 10,000 personnel working on protecting the border.

Security Concessions

Obtaining concessions on security with a first round of tariffs has been the stated objective of the Trump administration.

In reaction to Trump announcing the deal with Mexico, U.S. Vice President JD Vance said “a lot of the far left” in recent days had argued Mexico would not heed Trump’s demands on border security. “Well, how do you like them apples?” Vance wrote in a social media post.

Trump’s pick for commerce secretary, Howard Lutnick, had raised this issue as well during his Senate confirmation hearing last week. Lutnick said if Canada acts “swiftly” on the border it can avoid tariffs.

While Trudeau has assured that the border is secure, especially when comparing it to the Mexican one, Trump has been pushing back.

The U.S. president’s concerns about drugs like fentanyl, a synthetic opioid causing devastation on both sides of the border, appear to go deeper than the quantities that are being intercepted at the U.S. border.

Trudeau has been pointing out that the amount of fentanyl coming from Canada is less than 1 percent of what crosses from Mexico. U.S. Customs and Border Protection (CBP) data show that 43 pounds of fentanyl coming from Canada were intercepted in fiscal 2024, compared to 21,000 pounds from Mexico.

Trump’s executive order for imposing tariffs on Canada says the quantities are not relevant since a small amount can kill a large number of people.

The order says while CBP has comparatively seized “much less fentanyl” coming from Canada, it is “so potent that even a very small parcel of the drug can cause many deaths and destruction to America[n] families.”

Trump’s order adds that “the amount of fentanyl that crossed the northern border last year could kill 9.5 million Americans.”

Aside from quantities, the executive order also notes how fentanyl is linked to the broader issue of money laundering in Canada, as it makes a reference to a recent report by Canada’s financial intelligence agency, the Financial Transactions and Reports Analysis Centre (FINTRAC).

The order says FINTRAC’s recent study on the laundering of proceeds of illicit synthetic opioids “recognized Canada’s heightened domestic production of fentanyl, largely from British Columbia, and its growing footprint within international narcotics distribution.”

FINTRAC’s “operational alert,” published in late January and apparently referenced by Trump, says organized crime groups are increasingly involved in the synthetic opioid trade, importing precursor chemicals and lab equipment from China and other countries.

“These threat actors are also using darknet marketplaces and virtual currencies to distribute and facilitate payments for fentanyl and other illegal synthetic opioids on an international scale, among other traditional methods,” said FINTRAC.

China has also been targeted with additional 10 percent tariffs by a Trump executive order signed on Feb. 1, also for its role in the trade of fentanyl.

Trump said he had taken steps during his first term to deal with synthetic opioids coming from China. Since then, however, the Chinese Communist Party has “subsidized and otherwise incentivized” Chinese companies to “export fentanyl and related precursor chemicals that are used to produce synthetic opioids sold illicitly in the United States,” he said.

Trump added Beijing also “provides support to and safe haven” to transnational crime groups.

A senior Trump adviser told reporters on Feb. 3 that Mexican cartels are using precursor chemicals coming from China and they have now expanded to Canada.

“They’re making fentanyl [in Canada] and sending it down to the U.S. from there, the Chinese are using Canada to send in small parcels below the radar,” said Peter Navarro, assistant to the president and director of the Office of Trade and Manufacturing Policy.

“The difference between Mexico and Canada thus far is that Canada thinks we’re fighting a trade war with them. That’s not the case. This is a drug war.”

Other Grievances

Aside from border and security issues, Trump has expressed a number of grievances he has with Canada. His latest one is that Canada’s market doesn’t allow enough access to U.S. banks.

“Canada has been very abusive of the United States for many years. They don’t allow our banks,” Trump told reporters on Feb. 2.

He also decried the lack of access for U.S. farm products. Canada’s supply management system for products like milk and eggs has long been a trade irritant of the United States.

Trump also expressed displeasure with Canadian political leaders as he outlined other sticking points including oil and energy.

“I disagree with the leadership of Canada, and something is going to happen there, but if they want to play the game, I don’t mind. We can play the game all they want,” Trump said.

The U.S. president started referring to Trudeau as the “governor” of the 51st U.S. state when the prime minister went to see Trump at his Mar-a-Lago resort in Florida in late November. He has since repeated regularly that Canada should become a U.S. state and it would be a way to avoid tariffs.

“If people wanted to play the game right, it would be 100 percent certain that they'd become a state,” Trump told reporters in the Oval Office on Feb. 3. “But a lot of people don’t like to play the game because they don’t have a threshold of pain.”

It remains to be seen whether Trump will keep the tariffs off once the 30 days of pause are over. He said on Feb. 3 that “the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured.”

But after this round, as his officials review America’s trade deals with other countries, other tariffs tied to trade grievances may be possible.

“The ordinary tariffs need to be studied and examined, and that will start, as the EO [Trump’s executive order] said, in April,” Lutnick said on Jan. 29.