OTTAWA — The Canadian government will slap escalating reciprocal tariffs on American products if Donald Trump moves ahead, as expected, as early as Monday with threatened tariffs against Canadian goods and is studying ways to support businesses and workers if an all-out trade war erupts.
Immediate payouts to hard-hit sectors or workers are not expected right away, and it may take weeks and months for the tariff dispute to play out, or for job losses, reduced hours and lost pay for Canadian businesses to be felt, according to a senior federal official.
“If the president-elect does choose to move forward on tariffs, Canada will, of course, respond,” Prime Minister Justin Trudeau said Friday when he met in Toronto with members of a Canada-U.S. relations advisory council, and separately with the Canadian Automotive Partnership Council. “And I will say it again, everything is on the table.”
Trudeau echoed comments earlier Friday by Foreign Affairs Minister Mélanie Joly, who spoke from Washington where she said Canadians should brace for tariffs Monday, but held out hope there’s still time to avoid a trade war.
Part of a weeks-long scramble by Canadian politicians to persuade American lawmakers close to Trump to urge him to backtrack, Joly said key Republicans and Democrats she spoke with were “surprised” and “very worried” by Canadian warnings of a massive impact on American consumers and businesses, who would pay the higher costs of Canadian products ranging from energy, autos and auto parts, to forestry, potash, and seafood and agricultural goods.
“And so I think we still have a case to make,” Joly told reporters in a virtual news conference.
Joly chalked up the surprised reactions to a “level of disorganization in Washington” that is expected in a transition — people, she said “are just settling in, and so this is all new information” — but she also attributed it to a “level of unpredictability” related to Trump and his administration, which is why Canada has to be ready to exert “maximum pressure” on the Americans if he goes ahead.
“This is a defining moment. And there is clearly a chance for us to have a say in what President Trump will do next. And meanwhile, we just need to be united because if we need to retaliate, we will do so.”
As the Star first reported, the Canadian government has prepared three rounds of countermeasures that could escalate as needed on American imports to this country, depending on what Trump does.
The federal government has prepared an initial list of Canadian counter-tariffs to target 10 politically sensitive imports like Florida orange juice that could roll out on Monday if Trump acts, for example, with tariffs on Canada at a much lower rate than 25 per cent.
That could, however, expand to counter-tariffs on $37.6 billion worth of American imports to this country, while a broader list of counter-tariffs on $150 billion worth of imports is also in the works — an escalation that would respond to Trump’s moves, following a short period of public consultations of up to two weeks, sources said.
The Liberal government says that just like it has taken nothing off the table when it comes to a tariff retaliation strategy (including, over Alberta’s objection, making Canadian energy shipments more expensive for Americans), nothing has been ruled out when it comes to supporting Canadians, whether it’s directing payments to businesses or to individual workers or more supports through the employment insurance program.
However, the federal official, who the Star agreed not to identify because they were not authorized to discuss the plans publicly, said it’s clear a tariff war could increase the cost of living, and the Liberal government is wary of a potential inflationary impact of direct emergency payments.
The Conservative opposition has long blamed the Liberals’ pandemic-related spending as the key cause of inflation’s rise since 2020, not supply chain blockages or other factors.
Joly said the federal government estimates that the impact here, if Trump follows through on his Nov. 25 threat to slap a 25-per-cent surcharge on all Canadian goods on his first day in office, would be massive.
It would increase the cost of living and entail job losses across Canada and in key U.S. states, Joly said. But she refused to provide federal estimates of exactly what those national job losses or the hit to Canada’s economic activity could be.
Federal officials have said if Canada were to implement “dollar-for-dollar” counter-tariffs at that scale, it could require Canadian levies on $600 billion worth of imports from the U.S.
Joly did not dispute an assertion by former finance minister Chrystia Freeland, in an op-ed in the Star, that if Canada hits back with “dollar for dollar” counter-tariffs on American imports to match Trump’s 25-per-cent proposed tariffs, it could mean $150 billion in revenue for Ottawa.
Joly said the federal government would use that money to “support Canadians,” but did not elaborate other than point to the Trudeau government’s record of handling the economic downturn that resulted during COVID-19 pandemic’s lockdowns.
According to an analysis by economist Trevor Tombe for the Canadian Chamber of Commerce’s Business Data Lab, a 25-per-cent-across-the-board tariff by the U.S. could shrink Canada’s economy by two to three per cent — depending on how Canada retaliates. Tombe says some 2.4 million jobs are “exposed” or vulnerable in a trade war, whether via job losses, or reduced hours and pay.
“Definitely we have numbers that are highlighting how much this could be devastating,” Joly acknowledged. “The Americans would be starting a trade war against us. And this would be the biggest trade war between Canada and the U.S. in decades.”
Bea Bruske, head of the Canadian Labour Congress that represents about three million unionized workers, said in an interview the federal government needs to bring business, labour, and community leaders together “because the impact will be felt not just in workplaces but in the communities that those workers live in.” She worries the social safety net is not strong enough, saying “only two in five Canadians right now qualify for things like employment insurance.”
“So we’ve long been calling for a stronger, more robust system.”
Right now, however, Joly suggested nobody, including key Republicans, really knows what Trump will do. “I don’t think the decision has been taken, and I think the only person who knows what decision will be taken is the president himself,” she said in French.
“So what we’re doing is to control what we can control, which means to be prepared.”
