Will Canada Retaliate With Its Own Tariffs if Trump Follows Through on Threats?

Public Safety Minister Dominic LeBlanc looks on as Deputy Prime Minister Chrystia Freeland speaks to reporters after a cabinet meeting on Parliament Hill on Nov. 26, 2024. The Canadian Press/Adrian Wyld

Canada responded with retaliatory tariffs in 2018 when then-U.S. President Donald Trump imposed tariffs on Canadian steel and aluminum products. That response may again be considered should President-elect Trump follow through on recent threats to impose 25 percent tariffs on Canadian imports.

Deputy Prime Minister Chrystia Freeland said Canada’s 2018 response was “successful,” when asked during a Nov. 26 press conference whether Ottawa would consider retaliatory tariffs again this time.

“Canada had a united, smart, targeted response. We imposed dollar-for-dollar retaliatory tariffs on the United States,” she said, referring to the 2018 tariffs. “Our response was successful.”

Some warn the impacts of retaliatory tariffs would be hard on Canada as well. It’s like “cutting off your nose to spite your face,” said economist Jack Mintz, president’s fellow at the University of Calgary’s School of Public Policy.

“Economics literature would suggest that retaliation hurts the economy even more,” he told the Epoch Times via email. He said retaliation could also be “politically desirable to show that we can be tough too.”

Reaching an agreement to avoid tariff increases on either side is the best course of action, he said, and “should be our aim.”

Retaliatory tariffs on U.S. imports would raise costs for those goods domestically. Any retaliatory tariffs are likely to be “targeted and strategic,” said TD economist Marc Ercolao in a report published Oct. 24.

“This would mimic the actions taken in 2018 when Canada released a laundry list of consumer goods that would face a 10% tariff in addition to steel and aluminum tariffs,” he said. “From whiskies to orange juice and lawn mowers to maple syrup, goods categories were carefully selected to inflict pain on Republican and swing states while protecting Canadian producers and consumers.”

Trump’s tariff on Canadian steel products in 2018 was 25 percent, and his tariff on Canadian aluminum products was 10 percent.

Failing the ability to avoid a U.S. tariff hike, a retaliation approach will likely be “top of mind” for Ottawa, Ercolao said.

Trump had spoken during his presidential campaign of imposing tariffs and, on Nov. 25, announced his plan to sign an executive order to that effect upon taking office in January 2025. He said he will charge a 25 percent tariff on all products from Canada and Mexico in response to an influx of illegal immigration and illicit drugs being brought into the United States over the borders.

“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power, and until such time that they do, it is time for them to pay a very big price!” he said in a statement.

Mexican President Claudia Sheinbaum has threatened retaliatory tariffs.

“One tariff will follow another and so on, until we put our common businesses at risk,” she said on Nov. 26, adding that tariffs may cause inflation and job losses in both the United States and Mexico.

On Nov. 27, Trump said he had spoken with Sheinbaum, and that her country had agreed to prevent illegal immigrants from going to the southern border “effective immediately.”

Hardest Hit Sectors

The hardest hit sectors in Canada would likely be the auto and energy industries, because those are the top industries for export to the United States.

Global Automakers of Canada president and CEO David Adams says he’s taking Trump’s threats “seriously,” regardless of whether the tariffs may be a threat aimed at inciting action on border issues.

“If such a tariff is pursued, it will obviously be damaging for all sectors of the economy—including our own—but that damage will be felt on both sides of the border, given how integrated our economies are,” Adams told The Epoch Times via email.

U.S. exports to Canada totalled $484 billion in 2023, while Canadian exports to the United States totalled $593 billion.

“The economic relationship between our two countries is balanced and mutually beneficial,” Freeland said on Nov. 26. “We need them and they also need us.”