Canadian PM Justin Trudeau Prepares for Trump's Tariff Threats
Canadian Prime Minister Justin Trudeau has expressed concerns over President Donald Trump's trade rhetoric, viewing it as an attempt to destabilize trading partners and weaken their negotiating positions.
On Monday, Trump signaled the potential imposition of 25% tariffs on Mexico and Canada as early as February 1. However, this announcement appeared to contradict an executive order directing US officials to evaluate trade and border relationships by April 1.
Trudeau acknowledged the volatility in currency markets caused by Trump's comments. He described Trump as a "skilled negotiator" who aims to keep his counterparts off balance.
Mexican President Claudia Sheinbaum echoed Trudeau's stance, emphasizing the need for composure and adherence to signed agreements beyond mere rhetoric.
In response to potential tariffs, Canada has prepared a list of retaliatory measures. If Trump targets a limited range of Canadian goods, Trudeau plans to impose tariffs on a smaller number of US items, primarily consumer products.
However, if Trump moves forward with broad 25% tariffs, Canada has a more extensive list of retaliatory items valued at $150 billion, including steel and aluminum.
Canada acknowledges the potential economic consequences of retaliation, including increased costs for consumers and businesses. The Bank of Canada has estimated a 6% hit to Canada's GDP if the US applies 25% tariffs and faces equal retaliation.
Despite the risks, Trudeau remains committed to "support and compensate" Canadian citizens and businesses affected by tariffs. He also expressed hope for avoiding a trade war.
Liberal Party leadership candidates Mark Carney and Chrystia Freeland have both denounced Trump's proposed tariffs as "illegal" and pledged dollar-for-dollar retaliation.
The Canadian dollar initially plunged after Trump's comments on Monday but has since recovered.
Trudeau emphasized the importance of Canadian resources, such as oil, steel, and aluminum, for fueling US economic growth and manufacturing. He highlighted the benefits of cooperation between Canada and the US.
The Canadian Chamber of Commerce remains cautious but prepared for potential tariffs on February 1.
Experts believe that Trump's promises may not be fully realizable, as he attempts to juggle multiple priorities, including strategic petroleum reserve filling, Venezuelan and Iranian oil sanctions, gasoline demand, and consumer cost reduction.
Alberta Premier Danielle Smith has criticized Trudeau's approach, advocating for a focus on expanding energy exports to the US and a joint energy security strategy.
Canada remains the largest external supplier of crude oil to the US, providing approximately 4 million barrels daily. Despite tensions, Trudeau emphasized the need for consensus to achieve mutually beneficial outcomes.