Americans realise Trump's tariffs on Canada will make life costly: Trudeau

Canadian Prime Minister Justin Trudeau said on Monday said Americans are beginning to wake up to the real reality that tariffs on everything from Canada would make life a lot more expensive" and said he will retaliate if Donald Trump goes ahead with them.

Speaking at an event put on by the Halifax Chamber of Commerce, Trudeau also said dealing with Trump will be a little more challenging than the last time because Trump's team is coming in with a much clearer set of ideas of what they want to do right away than after his first election win in 2016.

The US president-elect has threatened to impose a 25 per cent tax on all products entering the US from Canada and Mexico unless they stem the flow of migrants and drugs.

Trump got elected on a commitment to make life better and more affordable for Americans, and I think people south of the border are beginning to wake up to the real reality that tariffs on everything from Canada would make life a lot more expensive," Trudeau said.

On the weekend, Trump appeared in an interview with NBC's Meet the Press, where the president-elect said he can't guarantee that his promised tariffs on key US foreign trade partners won't raise prices for American consumers.

Let's not kid ourselves in any way, shape or form, 25 per cent tariffs on everything going to the United States would be devastating for the Canadian economy," Trudeau said.

It would also, however, mean real hardship for Americans as well. Americans import 65 per cent of their crude oil from Canada, significant amounts of electricity. Just about all the natural gas exported from Canada goes to the United States. They rely on us from steel and aluminum. They rely on us for a range of agriculture imports. All of those things would get more expensive.

If Trump makes good on his threat to slap 25 per cent tariffs on everything imported from Mexico and Canada, the price increases that could follow will collide with his campaign promise to give American families a break from inflation.

Economists say companies would have little choice but to pass along the added costs, dramatically raising prices for food, clothing, automobiles, alcohol and other goods.

The Produce Distributors Association, a Washington trade group, has said tariffs will raise prices for fresh fruit and vegetables and hurt US farmers when the countries retaliate.

We will of course, as we did eight years ago, respond to unfair tariffs, Trudeau said.

Trudeau said his government is still mulling over the right ways to respond, referencing when Canada put billions of new duties in 2018 against the US in a tit-for-tat response to new taxes on Canadian steel and aluminum.

Many of the US products were chosen for their political rather than economic impact. For example, Canada imports just USD 3 million worth of yogurt from the US annually and most of it comes from one plant in Wisconsin, the home state of then-Republican House Speaker Paul Ryan. That product was hit with a 10 per cent duty.

It was the fact that we put tariffs on bourbon and Harley-Davidsons and playing cards and Heinz ketchup and cherries and a number of other things that were very carefully targeted because they were politically impactful to the president's party and colleagues, Trudeau said.

Trudeau said when Trump says things he means them but they also know Trump is trying to insert uncertainty and a bit of chaos into democracies.

One of the most important things for us to do is not freak out, not to panic, Trudeau said.

Knowing these would be absolutely devastating means we have to take them seriously but it does mean we have to be thoughtful and strategic and not going around making our opponents arguments for him but making our arguments in a significant and united way."  Canadian officials have said it is unfair to lump Canada in with Mexico.

US customs agents seized 43 pounds of fentanyl at the Canadian border last fiscal year, compared with 21,100 pounds at the Mexican border.

Most of the fentanyl reaching the US where it causes about 70,000 overdose deaths annually is made by Mexican drug cartels using precursor chemicals smuggled from Asia.

On immigration, the US Border Patrol reported 1.53 million encounters with irregular migrants at the southwest border with Mexico between October 2023 and September 2024. That compares to 23,721 encounters at the Canadian border during that time.

Trump has also claimed the US is subsidising Canada to the tune of over USD 100 billion a year".

On America's trade deficit Canada's ambassador to Washington, Kirsten Hillman, told the AP US had a USD 75 billion trade deficit with Canada last year but noted a third of what Canada sells into the US are energy exports and prices have been high.

About 60 per cent of US crude oil imports are from Canada, and 85 per cent of US electricity imports as well.

Canada is also the largest foreign supplier of steel, aluminum and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager for and investing for national security.

Nearly $3.6 billion Canadian ($2.7 billion) worth of goods and services cross the border each day. Canada is the top export destination for 36 US states.