"Catastrophic." That was the first word that came to mind for Ian Lee, a professor at Carleton University's Sprott School of Business in Ottawa, when he learned of Donald Trump's intention, announced on Monday, November 25, to impose a 25% tariff on products exported by Canada. A few figures help to better grasp his reaction and the scale of the threat. In 2023, more than three-quarters (77%) of Canadian exports by value, totaling 595 billion Canadian dollars (or €403 billion) were headed for the United States, and more than 2.2 million Canadian jobs depended on them.
Leading these exports are energy products (€112 billion), followed by motor vehicles and parts (€57.6 billion). "If Trump implements the tax, the automotive industry in southern Ontario will lose its main export market overnight. There will also be a major impact on port activity and rail trade. It's almost like Trump announcing a border shutdown," said Lee.
In his report "Partners for Prosperity: Exploring the Significance of Canada-U.S. Trade," University of Calgary Economics Department professor Trevor Tombe anticipated that a 10% tariff on Canadian exports would reduce the output exported to the US by the Canadian energy and manufacturing sectors by 22%.
In 2026, the three signatory countries of the Canada-US-Mexico Agreement will have to decide whether to extend the text. But in reality, if Trump's threat is carried out, "the agreement no longer exists, because the US will no longer respect its terms," observed Nelson Wiseman, a professor emeritus of political science at the University of Toronto.
During Trump's first term, the previous trade war between the two countries resulted in 25% tariffs imposed on steel imports and 10% on aluminum imports, to which Ottawa responded. However, the announced tax is quite different according to Wiseman: "It's just a threat! But the tariffs he's announcing affect all sectors. A targeted response is impossible." Trump is making the lifting of tariffs conditional on better control of the Canadian and Mexican borders.
The issue was seen as sufficiently serious at the top of the Canadian government that a telephone conversation took place on Tuesday, November 26, between Trump and Canadian Prime Minister Justin Trudeau, an exchange described as "good" by the latter. Ottawa is hoping that this thunderous announcement will be nothing more than a rhetorical flourish. On November 25, Canada's Immigration Minister Marc Miller said that the US would be shooting itself in the foot with this tax. In fact, only a fifth of Canadian exports to the US are final consumer goods: most of the exports to the US are used in local production. The US supply chain could be undermined by the president-elect's risk-taking strategy.
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