Ontario, Alberta premiers respond to Trump's threats
As Canada faces a significant challenge with U.S. President Donald Trump threatening to impose tariffs on all products entering the U.S. from Canada, a purely retaliatory response can only make things worse, according to one expert.
Trump had threatened to slap a 25-per-cent tariff on all products entering the U.S. from Canada and Mexico on Jan. 20, 2025 unless the two countries can put a stop to the flow of drugs and migrants across their borders.
"This tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country!" Trump wrote on his social media platform Truth Social.
According to CNN, Trump now plans to impose the tariffs on Feb. 1.
In response, the Canadian federal government is going to fight the proposed tariffs by imposing its own tariffs on US imports, according to a previous report from Reuters.
This action alone is not enough, says Stuart Trew, senior researcher at the Canadian Centre for Policy Alternatives (CCPA).
“It is neither feasible nor desirable for Canada to try to mirror U.S. tariffs with matching charges on U.S. imports entering Canada. In the worst-case scenario of a 25% tariff on all Canadian imports to the U.S., a perfectly reciprocal response could worsen the situation in Canada by increasing consumer prices, compounding costs for business and chasing away private investment in the economy,” he says,
Instead, Canada should “respond with maximum force and minimum harm to Canadian jobs and inflation through a combination of retaliatory tariffs and strategic export taxes on energy and natural resource exports to the U.S.”
Trew advocates for the implementation of export taxes on oil, uranium, aluminum, potash, and natural gas. These resources are vital to the U.S. economy and difficult to source elsewhere, creating a strong bargaining position for Canada.
“A 25% export tax on energy (oil and gas) exports alone would net more than $40 billion a year at current prices and trade levels,” he notes.
Trew is also calling on the Canadian government to work with other countries to fight Trump’s moves. He notes that even if Canada avoids a bilateral 25% tariff, it’s still possible Canadian goods will be covered by Trump’s threatened global 10% or 20% tariff on all U.S. imports.
Trump’s economic advisory team is reportedly considering phasing in the global tariff by 2% to 5% a month in an effort to temper inflationary pressures from the tariffs in the U.S., he notes.
“For maximum effect, however, Canada should coordinate whatever retaliatory strategy it develops with Mexico, the European Union and other countries. The U.S. economy is in a better position than either Mexico’s or Canada’s on their own to weather a prolonged trade war. But even Trump would find it difficult to justify a two- or multi-pronged counterattack from America’s largest trading partners.”
Previously, Ontario Premier Doug Ford praised the federal government’s plan to secure the Canada-U.S. border in response to former Trump’s threat to impose a 25% tariff on Canadian imports.
Now, Ford is calling for a partnership between the two countries.
“Canada and the United States can be the richest, most successful, safest and most secure two countries on the planet. Working together, we can usher in a new American and Canadian century, a time of unprecedented growth, job creation and prosperity. We do so by building Fortress Am-Can, a renewed strategic alliance between the U.S. and Canada that is a beacon of stability, security and long-term economic growth on both sides of the border.”
However, “an unnecessary trade and tariff war” stands in the way, he says.
Trump tariffs could spark middle manager layoffs in Canada, according to a previous report.
Alberta Premier Danielle Smith is calling on the federal government to take “steps to preserve and strengthen our economic and security partnership with the United States, and to avoid the future imposition of tariffs.”
Despite the hope for peace, Ford says he’s ready to go head-to-head with Trump, if it comes to it.
“Make no mistake, I am ready to protect Ontario workers, businesses and families. As Premier of Ontario, if President Trump’s tariffs make retaliation necessary, I will stand shoulder to shoulder with the rest of Team Canada to fight back using every tool in our toolkit.
“The province is ready to support federal tariffs as part of the country’s first line of retaliation. If necessary, we are ready with additional retaliatory measures within provincial jurisdiction that can support escalation over time. We will make decisions about when and how to implement provincial retaliatory measures in collaboration with the federal government as they lead Canada’s response.”
Small business confidence in Canada took a hit in the face of the US tariffs threat, according to a previous report from the Canadian Federation of Independent Business (CFIB).