Should Canada retaliate if Trump makes good on 25 per cent tariff threat?

After U.S. president-elect Donald Trump threatened to impose a 25 per cent tariff on all Canadian imports on his first day back in the White House unless his border concerns are addressed, there is mixed reaction on whether Canada should retaliate.

In a post to Truth Social on Monday night, Trump said the tariff “will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

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The U.S. is Canada’s largest trading partner, and the potential tariff is sparking new concerns over the economic impact it could have on jobs, inflation and supply chains.

Speaking to reporters in Ottawa on Tuesday, Deputy Prime Minister and Finance Minister Chrystia Freeland was asked directly about potential retaliation if Trump makes good on his threat but would not answer directly. Instead, she pointed to the federal government’s previous experience with tariffs under Trump’s first term.

“We reached an agreement with the Trump administration to have those tariffs lifted, to have the Canadian tariffs on the U.S. lifted, to have the U.S. tariffs on Canada lifted,” Freeland said. “And the reason we were able to do that is we were smart, we were united, we were strong.”

During his first term as U.S. president in 2018, Trump triggered a nearly year-long trade war with Canada after imposing a 25 per cent tariff on Canadian steel products and 10 per cent on Canadian aluminum. In response, Canada unveiled a 25 per cent counter tariff on a long list of American steel and aluminum products, along with a 10 per cent surtax on miscellaneous U.S. goods including coffee, prepared meals and maple syrup. Those retaliatory tariffs were eventually lifted in 2019 after Canada, the U.S. and Mexico reached a deal.

Then, in August 2020, Trump once again announced plans to impose a 10 per cent tariff on Canadian aluminum. In a statement at the time, Freeland said “Canada intends to swiftly impose dollar-for-dollar countermeasures,” but one month later, Trump hit pause on those tariffs amid the looming presidential election later that year. Trump went on to lose that election to Joe Biden.

Freeland, who chairs the revived Cabinet Committee on Canada-U.S. relations, also said the “government will always defend the national interest” and stressed that “this is a moment when Canada needs to be united.”

Industry Minister François-Philippe Champagne, when asked about potential retaliation, said “let’s take things step by step.”

Going a step further in an interview with CTV’s Power Play with Vassy Kapelos, Public Safety Minister Dominic Leblanc said any counter-tariffs from Canada would not come until the U.S. tariffs “are in place.”

“We think we're some way away from having those tariffs implemented as ultimately they are by the United States, and we're prepared to talk to the administration,” Leblanc told Kapelos.

Premiers, Poilievre weigh in

Reaction to how Canada should respond is mixed amongst former and current political leaders from other parties and levels.

On Tuesday, when asked if he would be willing to retaliate, Conservative Leader Pierre Poilievre said, “if necessary."

Ontario Premier Doug Ford, who called Trump’s tariff threat “insulting,” said if it comes to it, “there is no choice," but to respond with counter-measures.

“Hopefully we won’t come to that," Ford said. “We have to retaliate, not against the Americans, (but) the administration that has made a wrong call on this.”

NPD Leader Jagmeet Singh also would not rule out retaliation, saying “what Trump is proposing is economic bullying.”

“Retaliatory tariffs should be on the table as an option. Everything has to be on the table,” Singh said.

Singh also criticized Prime Minister Justin Trudeau’s approach and called for a plan to “fight like hell to protect Canadians.”

“The Liberal approach, Justin Trudeau’s approach, is one of, don't worry, this will be OK,” Singh said. “I am worried. It is not going to be OK, unless we fight.”

But others say they would wait on threatening tariffs.

In an interview with “The Vassy Kapelos Show” on Tuesday, former Canadian ambassador to the U.S. David MacNaughton said he would “not spend any time” threatening retaliation right now.

“We cannot win a trade war with the United States of America, so we shouldn't start threatening that because that is not going to end well,” MacNaughton said.

Instead, MacNaughton believes Canada should be focused on addressing the border issues Trump is raising.

“I'd be focused in on the things that we know that they've been concerned about and are mentioned in (Trump’s) social media post and I think things will work out fine for us if we demonstrate real good will and actual outcomes,” MacNaughton said.

Manitoba Premier Wab Kinew expressed a similar sentiment, saying “we have to show the Americans that we’re serious about border security and we’re serious about tackling the drug crisis.”

“I think responding to that concern today will also help us on the trade side,” Kinew told reporters on Tuesday.

In a post on “X,” former Conservative leader Erin O’Toole called Trump’s threat an “attempt to set the negotiation table before he gets sworn in.”

Like MacNaughton and Kinew, O’Toole said Canada needs to work on shared priorities with the U.S., which include increasing defence spending to reach NATO’s two per cent of GDP target and alignment on the border.

“Canada needs to pick key priorities to build common cause with the U.S. & do things that are in our national interest anyway. This is what negotiation is. It is what we should have done last time,” O’Toole wrote.

Trump is also threatening the same 25 per cent tariff on all Mexican imports.

On Tuesday, Mexican President Claudia Sheinbaum warned of the dire economic consequences the tariffs could have and hinted at retaliation.

"To one tariff will follow another in response and so on, until we put our common businesses at risk," Sheinbaum said in a letter to Trump, which she read at a press conference.

With files from CTV News’ Rachel Hanes, CTV News’ Rachel Aiello and Reuters