The Donald Trump administration has “informally” told Canada that it will impose 25 per cent tariffs across the board on Canadian products and 10 per cent on oil and gas, a move that will start Tuesday, according to a senior Canadian government official.
However, the Trudeau government has not been informed officially or seen any formal document confirming the details, said the official, who spoke to the Star on the condition they not be named.
The news, first reported by CBC News, comes after weeks of intense efforts by Canada to prevent Trump’s threat from being implemented.
Two federal insiders and one provincial source confirmed that the information was passed on to Ottawa Saturday morning, with the federal government looping in premiers and stakeholders but awaiting official notice of the details.
The Star has also learned that Trump is invoking a national emergency threat to impose the sanctions under the International Emergency Economic Powers Act.
In a “fact sheet” distributed to U.S. senators, and shared with the Star, the White House cited a crisis, saying “the flow of contraband drugs like fentanyl to the United States, through illicit distribution networks, has created a national emergency, including a public health crisis.”
“Until the crisis is alleviated, President Donald J. Trump is implementing a 25 per cent additional tariff on imports from Canada and Mexico and a 10 per cent additional tariff on imports from China,” the fact sheet said.
It said that energy resources from Canada will have a lower 10 per cent tariff.
“President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country,” according to the document’s talking points.
The fact sheet specifically says Canada is being targeted for allowing Mexican cartels to operate drug labs with impunity.
“There is a growing presence of Mexican cartels operating fentanyl and nitazene synthesis labs in Canada. A recent study recognized Canada’s heightened domestic production of fentanyl, and its growing footprint within international narcotics distribution.”
The White House minimized the fallout of a trade dispute for the U.S. economy, saying “while trade accounts for 67 per cent of Canada’s GDP, 73 per cent of Mexico’s GDP, and 37 per cent of China’s GDP, it accounts for only 24 per cent of U.S. GDP.”
It also said that, “However, in 2023 the U.S. trade deficit in goods was the world’s largest at over $1 trillion.”
The document pumped up the use of tariffs as a tool.
“Tariffs are a powerful, proven source of leverage for protecting the national interest. President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first,” the fact sheet said.
Government officials are expected to elaborate on Canada’s plan during a news conference later in the day.
Two sources confirmed that the Trump administration communicated a warning — which one source called a “reminder” that Trump has suggested tariffs could “rise” depending on Canadians actions.
Reacting to the news, Flavio Volpe, president of the Automotive Parts Manufacturing Association, said the only surprise is the timing, and said U.S. tariffs at this level “will simply shut down — within a week — automotive production across North America like the pandemic did.”
“It’s a simple principle. We’re in a just-in-time (delivery) business that carries no more than 24 hours inventory. And you can’t build a car or run a (production) line without all of the parts,” he said in an interview.
“And it is an immediate domino effect across North America.”
Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association, said the move will lead to job losses.
“At a moment when the North American automotive industry is facing competition from China in the EV market, these tariffs mean it will be fighting with one hand tied behind its back,” said Kingston, whose association represents Ford, GM and Stellantis in Canada.
In a statement to the Star via text message, Unifor national president Lana Payne slammed the U.S. tariffs, saying they’ve irrevocably changed the relationship between the U.S. and its neighbours.
“Everything from this moment on has been changed. Forever,” Payne wrote. “Our ally has declared economic war on Canadian workers and the country.”
Canada has been steeling itself against the prospect of American tariffs since Trump, looking towards a second term in office, threatened to impose a 25 per cent surcharge on imports from Canada and Mexico. Most trade experts and business groups had considered 25 per cent tariffs on all imports to be unlikely, and were instead expecting more targeted tariffs, at least initially.
Trump reiterated his plans to impose 25 per cent tariffs on Friday, though he suggested the U.S. would hold off placing a 10 per cent tariff on Canadian oil and gas until Feb. 18. One day earlier, Trump said he would consider not putting tariffs on Canadian oil and gas as long as those products were sold “at the right price.” He also suggested the tariffs imposed could rise over time.
The U.S. president has framed the surcharges as a way to force a crackdown against people illegally crossing its borders, as well as force stronger action to prevent the potent drug fentanyl from being smuggled between North American countries. “You see the power of the tariff,” Trump said on Friday. “Nobody can compete with us because we have by far the biggest piggy bank.”
The Canadian government has signalled its willingness to retaliate against American tariffs, and suggested it has multiple options available to hit back.
In 2023, the most recent year for which annual data is available, Canadian exports to the U.S. totalled $594.5 billion (Canadian), according to official statistics from the federal ministry for Innovation, Science and Economic Development. In top spot at $130.3 billion was crude oil, with other petroleum products estimated at a value of $36.6 billion. The American government’s trade figures show the U.S. imports hundreds of billions of dollars of products from Canada. Through the first 11 months of 2024, the U.S. brought in $377.2 billion (U.S.) in Canadian imports, or $542.5 billion in Canadian dollars.
The second-biggest player in this trade relationship is the automotive industry. Canada exported roughly $75 billion in cars, trucks and automotive parts to the U.S. in 2023, with industry insiders noting that some materials will cross the Canada-U.S. border several times while they’re crafted from raw material into a finished vehicle product.
Some economists have warned that hefty tariffs from the U.S. could push Canada into a state of recession. Earlier this week, Bank of Canada governor Tiff Macklem acknowledged the threat to the national economy from Trump’s threatened tariff action, while announcing a quarter percentage point slash in the bank’s key overnight lending rate that brought it to three per cent.
“There’s no doubt that weighed on our decision,” Macklem told reporters.
The threat has also been front and centre in Canada’s political arena, where multiple governments have either launched into or are preparing for electoral campaigns, and candidates have been questioned about their proposed responses. In Ontario, Progressive Conservative Leader Doug Ford raised the spectre of a trade war as a reason for plunging the province into an election more than a year early.
At a campaign stop in Brampton on Saturday, Ford said he was waiting on exact details, but supported the idea of Canada taking retaliatory action to “hit back strong.” “To President Trump I can only say this: this is not a smart move. It’s selfish,” Ford said. “It not only hurts Canadians, it hurts your own people.”
This is a developing story
With files from The Canadian Press and the Associated Press
