Canada prepares response to Trump in case of 'economic force'
Photo: Canada is preparing a response to the United States in case Donald Trump imposes a 25% tariff (Getty Images)
Canada is developing plans to impose notable duties on products from the United States. They will come into effect if the newly elected US President Donald Trump fulfills his threat to impose a 25% duty on Canadian goods, reports Bloomberg.
According to government officials, the Canadian government's draft plan for trade measures is a response to Trump's possible actions. Trudeau's aides discussed whether to publicly publish a list of potential duties before Trump's inauguration. But they are still not certain about what Trump is actually willing to do, so a draft list of retaliatory measures may not become public until the president-elect reveals his course of action.
The plans “go well beyond the narrow list of US-made items on which it placed counter-tariffs during a 2018 dispute.”
At that time, Canada decided to boycott certain products, such as Kentucky-made bourbon, exported to Canada. The trade dispute ended after the US, Mexico, and Canada agreed on a revised regional trade agreement.
'Dollar for dollar'
This time around, Canadian countermeasures will again hit many of the same products, as well as products such as orange juice from Florida.
“But Trudeau’s government is also preparing to go much further if necessary,” the report says, citing officials who spoke on condition of anonymity.
One list being circulated domestically includes almost all products the US exports to Canada, one government official said, with the overall goal of establishing "dollar for dollar" tariffs.
Worst-case scenario
The second official said that in a worst-case scenario, Trump would impose tariffs on all Canadian exports to the US. But Prime Minister Justin Trudeau's government is considering all options to hurt US exporters, the official added.
The officials emphasize that Canada's response will depend on what Trump actually does once he takes office.
“ Above all, the Trudeau administration still hopes to avoid a trade war, and has made the case that it’s taking seriously US concerns about border security,” Bloomberg reports.
Energy and steel
Another option is using export taxes on strategic goods such as oil, uranium, and potash.
“This would be an extreme step, but such a move would put immediate pressure on American energy prices,” the article notes.
Canadian officials expect that even if Trump doesn't go all the way with the mandatory tariffs, he will still try to limit Canadian exports in some way. This could include another blow to the steel industry, the cause of the 2018 trade fight.
Losses in Canada's GDP
Canada is the world's largest national buyer of US goods, importing about $320 billion in the first 11 months of last year, slightly less than the European Union with $341 billion.
According to the calculations of economists at the Bank of Nova Scotia, a 25% US tariff would cause Canada's gross domestic product (GDP) to fall by 3.8%.
“If Canada chooses 'full retaliation,' that cost rises to as much as 5.6%, though it would take a number of years for that damage to accumulate.,” the report states.
US-Canada 'trade war'
US President-elect Donald Trump accuses Canadian Prime Minister Justin Trudeau of being unable to resolve trade and immigration issues, Trump threatens to impose a 25% duty on goods from Canada to the US. After the meeting in Mar-a-Lago Trump even began calling Trudeau “the governor of the great state of Canada.”
During his Christmas greetings, Trump even described the “benefits” of including Canada in the United States. It was about a significant tax cut of more than 60%.
The attacks continued after Trudeau announced his resignation as Prime Minister of Canada. Although he will continue to lead the government for several more months.
