OTTAWA—Donald Trump’s warning of tariff escalation will bring inflation to the U.S. while Canada will protect its workers, says Canada’s finance minister Francois-Philippe Champagne.
Trump threatened Thursday in a post on Truth Social to further punish Canada and the European Union if they retaliate against his auto tariffs.
“It’s going to have the impact of having higher prices for US consumers, and at the same time, it’s going to you know, lower competitiveness in the United States,” said Champagne. “So what we have to do is to fight for Canada.”
Prime Minister Mark Carney suspended his election campaign as Liberal leader to briefly return to Ottawa to meet with his Canada-U. S. cabinet committee. He entered without speaking to reporters.
On Wednesday, after Trump slapped 25 per cent tariffs on non-U. S. auto imports, starting next week, Carney called it a “direct attack on Canada,” and “a direct attack on our workers.”
He vowed to respond with retaliatory tariffs. Canada has levied two tranches of counter-duties on $60 billion worth of American imports so far, in response to Trump’s tariff threats to date. And it has reserved other countermeasures against $65 million worth of U.S. imports- duties paid by Canadian importers.
Carney has said there is a limit to how far Canadian counter-tariffs can go but has not ruled out non-tariff measures like “Buy Canadian” procurement decisions or export tariffs on energy, uranium and potash.
Officials have suggested the overall tariff package could go beyond $155 billion. One official said no decision had yet been made on export tariffs, which they called “the ace.”
Conservative leader Pierre Poilievre on Wednesday condemned “the unjustified and unprovoked tariffs” and called for retaliatory tariffs against goods and services “that we don’t need, can buy elsewhere, or make ourselves.” He also promised affected workers would get “income replacement to put food on the table and money in your bank account. We’ll make sure that businesses directly affected will have the liquidity they need to get through this dispute.”
In a Thursday morning post on Truth Social, Trump warned: “If the European Union works with Canada in order to do economic harm to the USA, large-scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
“We’re always mindful of what the president says. But my job, our job, is to fight for Canadians,” said Champagne. “The Prime Minister was clear yesterday, we even put a fund to support the auto industry in this country … (for a) made in Canada supply chain.”
Champagne said the federal government would protect workers impacted by the tariffs and, when asked about people’s fears that the economy could collapse, the finance minister pivoted to reassurances and did not directly answer.
Kevin Page, former parliamentary budget officer and head of the Institute of Fiscal Studies and Democracy at the University of Ottawa, said in an interview this week that the economy will not collapse but Canada is likely to face a recession due to Trump’s tariff wars.
“The geopolitical uncertainties could have a worse impact,” he said.
“It’s not just that the stock markets get rattled. It’s also that people start to feel that it’s going to get worse. And then everybody slows down. Everybody stops spending.”
However, he said, the bigger picture of the government’s finances shows Ottawa can weather the storm ahead and is in a position to support the hardest hit sectors and workers.
“Our debt to GDP numbers are better than other countries, much, much better than the United States. So we could provide that kind of shock absorber if — depending on what happens — it can help Canadians. So in that sense, like, you know, we have some built-in resilience.”
