OTTAWA—Canada won an 11th-hour reprieve from Donald Trump’s threatened U.S. tariffs on Monday, just as Mexico received, after pledging to inject millions more into border security and committing to actions that may not stave off American duties experts say could be devastating to the Canadian economy.
Hours before a midnight deadline, Prime Minister Justin Trudeau said threatened U.S. tariffs against Canada will be paused for 30 days after his second call with the U.S. president Monday, a conversation that lasted 45 minutes and set in motion four more weeks of talks with the U.S. president’s team.
Trump posted on Truth Social that he was “very pleased with this initial outcome” and the tariffs would be paused “to see whether or not a final economic deal with Canada can be structured.”
The prime minister pledged another $200 million to fight organized crime and fentanyl smuggling, saying Canada would appoint a “fentanyl czar,” add Mexican cartels to the list of terrorist entities, and take other moves to show it was serious about addressing Trump’s concerns.
Trudeau posted on X that he laid out Canada’s previous $1.3-billion plan promised in November and said, “Nearly 10,000 front-line personnel are and will be working on protecting the border.”
That’s the same number of additional soldiers Mexico earlier pledged to send to its border with the U.S., and Trump echoed that language later.
The prime minister said Ottawa will ensure “24/7 eyes on the border, launch a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering.”
“I have also signed a new intelligence directive on organized crime and fentanyl and we will be backing it with $200 million. Proposed tariffs will be paused for at least 30 days while we work together,” the prime minister posted.
The second high-stakes call between Trudeau and Trump ended with Canada achieving the same break Mexico scored earlier in the day when Trump spoke to Mexican President Claudia Sheinbaum.
As Canadians awaited the results of the Trump-Trudeau call, tensions were running high.
On the Ontario election campaign trail Monday, Progressive Conservative Leader Doug Ford was caught on a hot mic expressing frustration with the president.
“On election day, was I happy this guy won? One hundred per cent I was. Then the guy pulled out the knife and f—-ing yanked it in me,” said Ford.
Stock markets had slumped, reflecting concern about the midnight deadline for Trump’s 25 per cent tariffs on most Canadian exports, with a slightly lower 10 per cent levy on oil shipments. Canada had pledged matching counter-tariffs on $30-billion worth of American imports.
After word spread Canada had avoided the midnight onset of a trade war, Ford called it “good news,” reversing the province’s ban on U.S. booze and his earlier decision to cancel Ontario’s $100-million contract with Elon Musk’s satellite internet provider Starlink.
“We have temporarily averted tariffs that would have severely damaged our economy, giving time for more negotiation and time for cooler heads to prevail. Thank you to the countless workers, union leaders, businesses and everyday proud Canadians who rallied together to make this happen,” Ford said.
Ontario will pause its retaliatory measures but if Trump goes ahead, Ford said, “we won’t hesitate to remove American products off LCBO shelves or ban American companies from provincial procurement.”
“No one should let their guard down or breath a sign of relief at this 30-day pause on the tariffs,” said Lana Payne, head of Unifor, Canada’s largest private sector union. “As a country, we must use the days ahead to continue to bring Canadians together, to continue to plan for a potential trade war, and to use every single lever we have to build a strong, resilient and diverse economy.”
Trump told American reporters Monday before his second call with Trudeau that Canada should become his country’s 51st state and then there would be “no tariffs.”
“I’d love to see that, but some people say that would be a long shot. If people wanted to play the game right, it would be 100 per cent certain that they’d become a state,” he said.
“But a lot of people don’t like to play the game because they don’t have a threshold of pain. And there would be some pain, but not a lot. The pain would be really theirs.”
A Canadian federal official, speaking on condition they not be identified, said Trump did not raise his desire to make Canada a 51st state in the call. And while Trump raised banking as an irritant in the morning call, it did not come up in their afternoon conversation. Nor did Trump raise water as a concern, as he has publicly in the past. The Trudeau team says it is clear that the president has a long list of irritants with Canada on the trade side, but the two leaders focused on the border in the afternoon call.
Public Safety Minister David McGuinty said Canada needs to take Trump’s comments about becoming a 51st state “seriously,” but he said in a CBC interview that “I think that comment is just not serious.”
While McGuinty said some of the latest changes were in the works already, it’s not yet clear what a “fentanyl czar” will do.
Mexican and Canadian officials have had several exchanges over the past weeks, but the official said Trudeau did not consult or co-ordinate with Sheinbaum on Monday.
Trump had earlier held out little hope for a deal to avoid tariffs on Canada.
Before he spoke Trudeau on Monday afternoon, Trump welcomed Mexico’s pledge to deploy an additional 10,000 soldiers at the border but said, “Canada is very tough. They’re very, very tough to do business with, and we can’t let them take advantage of the U.S.”
Trump raised a number of complaints including his latest — that American banks “cannot” do business in Canada — a declaration which is not accurate.
The president reiterated a statement that the U.S. does not need anything Canada makes, from cars to lumber, as he underlined that he had a “very good relationship” with Sheinbaum.
Trump said his final decision on Mexico would be made following a 30-day period of negotiations led by Secretary of State Marco Rubio.
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The Canadian Bankers Association rebuffed Trump’s claim about banking in a statement and said that “Canada has a strong and competitive banking sector comprised of both domestic and foreign banks.”
It said there are 16 U.S.-based bank subsidiaries and branches with around $113 billion (CDN) in assets currently operating in Canada.
“These banks specialize in a range of financial services, including corporate and commercial lending, treasury services, credit card products, investment banking and mortgage financing. They serve not only customers with cross-border business activities, but also Canada’s domestic retail market. U.S. banks now make up half of all foreign bank assets in Canada.”
Conservative Leader Pierre Poilievre said Monday that Canada should deploy soldiers to the border too, posting on X what he called a plan to “take back control of the border and save” Canada-U.S. trade. “Send Canadian Forces troops, helicopters & surveillance to the border now.”
Ontario’s threat to cancel its Starlink contract had directly targeted Starlink owner Musk, a key Trump adviser.
Musk briefly responded on X, the social media platform he owns, with a shrug: “Oh well.”
The Ontario government signed a $100-million deal in November for Starlink to deliver high-speed internet to remote residents in rural and northern Ontario.
Trudeau had responded to Trump’s tariff threat with a plan to impose 25 per cent tariffs on a range of American products worth up to $30 billion, with another layer of counter-duties on $125 billion worth of American imports to come in three weeks. All that is now on hold.
Ontario, Manitoba, Nova Scotia and British Columbia said they would ban American liquor from store shelves as political leaders pushed a “Buy Canadian” response to Trump’s weekend announcement he would impose tariffs, even as two western premiers urged Ottawa to “de-escalate” the rhetoric around tariffs.
