Outgoing Canadian Prime Minister Justin Trudeau issued a stark warning on Thursday, cautioning that American consumers will bear the brunt of President Donald Trump’s proposed tariffs on Canadian products. Speaking to reporters in Ottawa, Trudeau stated that the tariffs, which Trump plans to impose at a rate of 25% starting February 1st, will drive up prices on a wide range of goods.
“Whenever President Trump decides to move forward with these tariffs—whether it’s February 1st, Valentine’s Day, or even April Fool’s Day—Canada will respond with retaliatory tariffs,” said Trudeau. “Prices for American consumers on just about everything will go up.”
A risk to key markets
Trump’s tariff threat targets Canada, America’s second-largest trading partner after Mexico. Economists warn the move could disrupt key markets such as automobiles, lumber, and oil—sectors integral to both nations’ economies.
Danielle Smith, the Premier of Alberta, cautioned that tariffs on Canadian oil could significantly impact American fuel prices. “Some states could see gas prices rise by more than a dollar per gallon if these tariffs go ahead,” she said. Despite Trump’s claim that the US doesn’t rely on Canadian resources, nearly 25% of America’s daily oil consumption comes from its northern neighbour.
In addition to oil, Canada is a critical supplier of 34 essential minerals and metals, including steel, aluminium, and uranium. Trudeau emphasised the mutual benefits of the trade relationship, saying, “The US should be working even more closely with Canada on energy, critical minerals, and the goods they need to deliver the economic growth President Trump has promised.”
Retaliation looms
Trudeau outlined Canada’s readiness to respond if Trump’s tariffs proceed, referencing the tit-for-tat measures implemented during Trump’s first term. In 2018, Canada imposed billions of dollars in duties on US goods after the US raised tariffs on Canadian steel and aluminium.
“Everything is on the table,” Trudeau stated. “It would be bad for Canada, but it would also be bad for American consumers.” Potential retaliatory tariffs could target American products like orange juice, toilets, and certain steel items.
Nearly 3.6 billion Canadian dollars ($2.7 billion) worth of goods and services cross the US-Canada border daily. Canada is the top export destination for 36 US states, making the economic stakes high on both sides.
Trump’s trade narrative
Trump has long expressed dissatisfaction with the US trade relationship with Canada, frequently making erroneous claims about trade deficits. Speaking at the World Economic Forum, Trump repeated his assertion that the US has a $200 billion trade deficit with Canada—a figure widely debunked by economists.
“We’re not going to have that anymore,” Trump said. “We can’t do that. You can always become a state, and if you’re a state, we don’t have a deficit. We won’t have to tariff you.”
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This rhetoric, along with Trump’s focus on the border, has strained US-Canada relations. Earlier this week, Trump told reporters that significant amounts of fentanyl and illegal migrants were entering the US via Canada—a claim Trudeau dismissed as baseless.
“We’ve highlighted that less than one percent of illegal drugs and migrants entering the US come from Canada,” Trudeau said. “Nonetheless, we’re investing over a billion dollars to strengthen our border.”
Economic consequences
Analysts predict that the tariffs could have far-reaching implications for both economies. Disruptions in oil supply could ripple through US markets, affecting energy costs and inflation. Similarly, tariffs on lumber and automotive components could impact homebuilding and car prices, leading to increased costs for American consumers.
Trudeau stressed that cooperation, not conflict, was the preferred path forward. “Our first choice is to work together to achieve economic growth. But if they move forward on tariffs, we are ready to respond in a strong way—and to figure out how to get them removed as soon as possible,” he said.
Conclusion
As February 1st approaches, uncertainty looms over the future of US-Canada trade relations. While Trump remains steadfast in his tariff threats, Trudeau’s warnings highlight the potential consequences for American consumers and businesses. The next few weeks could prove pivotal in determining whether the two nations can resolve their differences or risk escalating economic tensions.
