Canada’s federal government and the premiers of the 10 provinces have agreed to work together against a threat by US president-elect Donald Trump to impose sweeping tariffs on Canadian imports, with one official saying the country was already examining possible retaliatory measures.
“We agreed that we need to be smart, strong and united in meeting this challenge,” deputy prime minister Chrystia Freeland told reporters on Wednesday after a virtual meeting with the premiers called by the prime minister, Justin Trudeau.
Trump has threatened to impose tariffs on products from Canada and Mexico if the countries do not stop what he called the flow of drugs and migrants across southern and northern borders. He said he would impose a 25% tax on all products entering the US from Canada and Mexico as one of his first executive orders.
Canada is already examining possible retaliatory tariffs on certain items from the United States should president-elect Donald Trump follow through on his threat, the Associated Press reported, citing a senior official.
Mexican President Claudia Sheinbaum said on Wednesday that her administration is already working up a list of possible retaliatory tariffs “if the situation comes to that”.
The Canadian official said Canada was preparing for every eventuality and has started thinking about what items to target with tariffs in retaliation. The official stressed no decision has been made and spoke on condition of anonymity as they were not authorised to speak publicly.
The pledge to impose tariffs on Canada would drive up fuel prices for Americans as it would upend decades-old oil trade from its top crude supplier, analysts said on Wednesday, with Canadian oil imports not exempt under a free-trade deal from the levies.
Even as surging oil output to record highs has made the US the world’s largest producer in recent years, more than a fifth of the oil processed by US refiners is imported from Canada.
In the landlocked US midwest, where refineries process 70% of Canadian crude imports, consumers could see pump prices jump by 30 cents per gallon or more, or about 10%, based on current prices, GasBuddy analyst Patrick De Haan said.
Cheaper gasoline was among Trump’s priorities during his re-election campaign as he sought to connect with consumers frustrated by sky-high fuel prices in the aftermath of the coronavirus pandemic, Russia’s invasion of Ukraine, the war in Gaza and other supply disruptions.
When Trump imposed higher tariffs during his first term in office, other countries responded with retaliatory tariffs of their own. Canada, for instance, announced billions of new duties in 2018 against the US in a tit-for-tat response to new taxes on Canadian steel and aluminium.
Many of the US products were chosen for their political rather than economic impact. For example, Canada imports $3m worth of yoghurt from the US annually and most comes from one plant in Wisconsin, home state of then-House speaker Paul Ryan. That product was hit with a 10% duty.
Another product on the list was whiskey, which comes from Tennessee and Kentucky, the latter of which is the home state of then-Republican Senate leader Mitch McConnell.
Trump made the tariff threats on Monday while railing against illegal migrants, even though the numbers at Canadian border pale in comparison with the southern border. The US Border Patrol made 56,530 arrests at the Mexican border in the month of October – and 23,721 arrests at the Canadian one between October 2023 and September 2024.
Canadian officials say lumping Canada in with Mexico is unfair but say they are happy to work with the Trump administration to lower the numbers arriving from Canada. The Canadians are also worried about an influx north if Trump follows through with his plan for mass deportations.
Trump also railed about fentanyl from Mexico and Canada, even though seizures from the Canadian border pale in comparison to the Mexican border. US customs agents seized 43lb (19.5kg) of fentanyl at the Canadian border last fiscal year, compared with 21,100lb (9,570kg) at the Mexican border.
Canadian officials argue their country is not the problem and that tariffs will have severe implications for both countries.
Canada is the top export destination for 36 US states. Nearly $3.6bn (US$2.7bn) worth of goods and services cross the border each day. About 60% of US crude oil imports are from Canada, and 85% of US electricity imports are from Canada. Canada is also the largest foreign supplier of steel, aluminium and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager for and investing in for national security.
“Canada is essential to the United States’ domestic energy supply,” Freeland said.
America’s top oil trade groups, the American Fuel and Petrochemical Manufacturers group and the American Petroleum Institute, said imposing the tariffs would be a mistake – exposing a rare moment of discord between the industry and Trump.
“Across-the-board trade policies that could inflate the cost of imports, reduce accessible supplies of oil feedstocks and products, or provoke retaliatory tariffs have potential to impact consumers and undercut our advantage as the world’s leading maker of liquid fuels,” AFPM said on Tuesday.
With Associated Press and Reuters
