What do Donald Trump’s proposed policies surrounding tariffs mean for Canada’s economy and leadership?

With less than two weeks remaining until President Donald Trump’s inauguration on Jan. 20, he has already announced as of Nov. 25 that there will be a 25 percent tariff on all goods and services crossing the Canadian border. According to The Guardian, the tariffs have caused tension for Prime Minister Justin Trudeau, as leaders and politicians are waiting to see how the prime minister will respond. As a result, Canada’s finance minister for almost 15 years, Chrystia Freeland, announced her resignation on Dec. 16 due to ongoing tensions with Trudeau.  

As reported by The Guardian, Chrystia Freeland was just hours away from announcing Canada’s economic plan and how to best respond to Trump’s tariffs before resigning. The Guardian reported that Freeland expressed concerns about the government’s fiscal direction in her resignation letter to Trudeau. Saying, “We need to take that threat extremely seriously. That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war.” The announcement of her resignation surprised Canadians, leaving Trudeau without a key cabinet ally. According to CTV, along with the shock came doubts about the prime minister’s political survival in future elections, with The Guardian reporting that Trudeau could be pushed towards resignation after a possible tariff war.   

CBC reported that the possible 25 percent tariffs on imported goods could devastate Canada’s economy and impact Canada’s relationship with the U.S. as an ally. For example, Investopedia, a Canadian financial media website, reported that many products could get more expensive under Trump’s implemented tariffs. For instance, the article “These Products Could Get More Expensive Under Trump’s Tariff Plan” says electronics and appliances will likely see price increases as the majority of the technological appliances are imported from the U.S, with approximately $463.36 billion worth of electrical and electronic equipment being imported, as reported by the U.S Census Bureau.  

Global News has also reported that the U.S. tariffs might affect Canada’s agriculture industry, “The Canadian food supply is very integrated with the U.S,” said J.P Gervais, chief economist at Farm Credit Canada. Gervais spoke on how the tariffs raised the cost of business and squeezed profits for Canadian producers. He said it could worsen the market and make it more difficult for companies to expand their business and plan investments. For instance, an article by Global News says Canada imports a variety of fruits and vegetables from the U.S., especially during off-season periods, where tariffs could lead to increased prices for consumers and supply chain disruptions.  

However, according to CBC, some Canadian industry leaders suggest that Trump’s threat to implement tariffs on Canada is a “bluff,” as said by Jenna Benchetrit at CBC. The U.S. Census Bureau has reported that the U.S. has heavily relied on Canada for natural gas, machinery, plastics, gold, electricity, wood and agriculture products in recent years. The highest imports were more than $103.22 billion in oil and gas and $73.44 billion in transportation equipment in 2023. If Trump moves forward with implementing the 25 percent tariffs on Canada, “Americans will have to absorb the higher prices from the proposed tariffs,” said Benchetrit, raising prices of goods like oil and vehicles in the U.S 

This article was originally printed in Volume 24, issue 5 on January 9th, 2025.