With the United States (US) presidential inauguration only a week away, the frenzy of “will he or won’t he” speculation is growing about President-elect Donald Trump’s threat to impose a 25 percent tariff on all Canadian and Mexican imports on the first day of his presidential term. Is it purely bluster and braggadocio, or does President-elect Trump mean what he says? Will Canada impose retaliatory measures? The Internet is rife with opinions from one end of the spectrum to the other. Canadian Foreign Affairs Minister Melanie Joly is strongly hinting that some form of tariffs is inevitable, although no one can say for certain what they will look like or when they might be imposed.
The CSCB has compiled a few resources about what we do know to help members understand what could be at play if the US does impose tariffs on Canadian commodities once President Trump is inaugurated:
Response measures. Canada imposed retaliatory measures in response to last round of US tariffs applied to Canadian goods, in 2018: https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/measures-steel-aluminum-businesses/countermeasures-response-unjustified-tariffs-canadian-steel-aluminum-products.html. This time around, the Canadian government has apparently drafted a list of potential commodities that could be the subject of retaliatory tariffs this time, but it has not yet been made public: https://www.cbc.ca/news/politics/canada-trump-tariff-threat-items-1.7426392.
Economic impacts. Many economists agree that the US imposition of a 25% tariff on Canadian goods would have negative impacts on both countries’ economies. Check out this analysis from our counterparts at the Canadian Chamber of Commerce’s Business Data Lab for the details: https://businessdatalab.ca/publications/what-the-return-of-the-tariff-man-means-for-the-canadian-and-u-s-economies/.
Potential exemptions. It’s possible that the US tariffs will be applied with exemptions – for example, the 2018 round of US tariffs only targeted Canadian steel and aluminum goods. For a good primer on “what-if” scenarios for how the tariffs might be applied, check out this article from Norton Rose Fullbright: https://www.nortonrosefulbright.com/en-ca/knowledge/publications/a72040b4/tariffs-101-what-you-need-to-know-about-tariffs
Have you come across another reputable source of information about US tariff scenarios? Please send it to [email protected] and we’ll do our best to share it and any other current information with members as momentum builds towards inauguration day on January 20, 2025.