Trump’s 25-per-cent tariff equals pain on both sides of border, Canadian leaders say

Business and political leaders in Canada say there will be pain if Donald Trump follows through on his pledge to impose a 25-per cent tariff on all Canadian goods, but they note the hurt will happen in his country as well.

The president-elect posted to Truth Social on Monday he will sign an executive order imposing a 25-per-cent tariff on all products coming in to the United States from Canada and Mexico.

He said the tariff will remain in place until both countries stop drugs, in particular fentanyl, and people from illegally crossing the borders.

Canadian American Business Council CEO Beth Burke said in a statement last night that Trump’s proposal would harm businesses on both sides of the border and would “erode the economic and geopolitical strength of North America.”

Ontario Premier Doug Ford posted on social media that a 25-per-cent tariff would be devastating to workers and jobs in both Canada and the U.S.

Quebec Premier François Legault tweeted that everything must be done to avoid the tariffs, and British Columbia Premier David Eby posted Trump’s tariffs “would hurt Canadians and Americans alike.”

“Canadians must stand united. Ottawa must respond with strength,” Eby tweeted.

Alberta Premier Danielle Smith said in a social media post that the Trump administration has “valid concerns related to illegal activities” at the border. But she noted vast majority of her province’s energy exports to the U.S. are “delivered through secure and safe pipelines” which she said “do not in any way contribute to these illegal activities.”

Modelling by the Canadian Chamber of Commerce suggests a 10-per-cent across-the-board tariff would reduce the size of the Canadian economy between 0.9 and one per cent, resulting in around $30 billion per year in economic costs.

It estimates the U.S. would see around US$125 billion a year in economic costs.

“For the American businesses and for American consumers, this would mean higher prices and increased costs for input and less competitive business environment for America as well,” the chamber’s chief economist, Stephen Tapp, said in an interview late Monday.

Things would be even worse if other countries retaliated with tariff walls of their own. In that case, Canadian incomes would fall by 1.5 per cent and productivity by 1.6 per cent, the chamber’s report said.

Tapp said in this case it would amount to USD $2,000 less in purchasing power for the American consumer. The numbers are even higher with a 25-per-cent tariff.

He suspects that increased cost would not be appreciated in a U.S. that voted for Trump’s promises of reducing inflation and the cost of living.

“Consumers that have just gone through the pandemic and large inflation, then difficult times for Americans and Canadians, I think they would really not be happy to see prices go up and the sticker shock that they would feel after prices came in.”

A joint statement from Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic LeBlanc said Ottawa will continue to discuss border security issues with the incoming administration.

Even the threat of tariffs is bad for investment in Canadian business, Tapp said.

“It would be bad for overall sentiment in Canada for the consumer side,” he said.

Trump’s first tenure in the White House did show that Canadian businesses ae resilient, Tapp said. They should prepare for a rush of orders before any tariffs come into play while also bracing for uncertainty and chaos in the four years that follow.

“We saw that we should take Trump seriously.”

This report by The Canadian Press was first published Nov. 26, 2024.

–By Kelly Geraldine Malone in Washington and Rob Drinkwater in Edmonton

The Canadian Press