U.S. president-elect Donald Trump threatened to increase his planned tariff on Canadian goods to 25 per cent, leading to prompt meetings with Prime Minister Justin Trudeau in an attempt to facilitate negotiations.
On Nov. 25, Trump made a post on the Truth Social platform outlining his plans to charge Mexico and Canada with a 25 per cent tariff on goods that enter the United States.
In the post, Trump said that the tariff will be “one of [his] many first Executive Orders” to be signed on Jan. 20 when the presidential transfer of power occurs.
Trump cited the “ridiculous open borders” where the U.S. connects to Canada and Mexico as a reason for the tariff, saying that the countries allow the flow of illicit substances, “in particular fentanyl,” as well as “illegal aliens” into the U.S.
He said that the two countries have the “absolute right and power to easily solve this long simmering problem” and said that the increased tariff will be the solution.
If Trump instates the 25 per cent tariff, experts suggest it will be economically costly for Canada.
The threat has already begun to ensue chaos in Canada, with impacts being seen in the dropping value of Canadian currency as the government considers their next move.
Ian Lee, an associate professor at the Sprott School of Business at Carleton University, told CBC News that the threat “is just completely bad news” and could have overwhelming impacts on the Canadian economy.
He noted that two-thirds of Canada’s GDP is dependent on trade and that the U.S. is Canada’s most significant trade relationship, emphasizing the possible catastrophe that could come from added costs.
Many Canadian politicians also showed concern to Trump’s proposed tariff.
In a post on X, Premier Doug Ford called the proposed tariff “devastating,” asking Trudeau to facilitate a “Team Canada” response and urgently craft a plan forward.
Trudeau mirrored this response, deciding to meet with Trump on Nov. 29 in West Palm Beach, Florida, to discuss the proposed tariff.
Trudeau commented that he and Trump had “an excellent conversation,” but did not say whether the 25 per cent tariff was off the table.
Trump echoed Trudeau’s sentiment in a post on Truth Social where he described the meeting as “very productive.” Trump said the two discussed the drug crisis, illegal immigration, Fair Trade Deals with American workers in mind and the trade deficit between the two countries, among other topics important to the relationship between the U.S. and Canada which Trump plans to address during “and before” his time in office.
Trump said that Trudeau “made a commitment to work with [the U.S.] to end [the] terrible devastation of U.S. families” as a result of the drug crisis.
Despite the lack of resolution on the topic of the 25 per cent tariff, the seemingly positive state of Canada-U.S. relations signals some optimism in preventing a decision that professionals agree could only do harm to both the trade relationship between Canada and the U.S. as well as Canada’s economy.