Prime Minister Justin Trudeau will assemble Canadian premiers today to discuss a 25% tariff on Canadian and Mexican products, proposed by US President-elect Donald Trump this week.
Catch-up: Trump vowed to implement the tariffs on his first day in office and keep them in place until both countries crack down on drugs and migrants at their borders. Trudeau has since insisted to Trump that circumstances in Mexico cannot be compared to Canada.
- Last year, US patrol officers had 23,721 “encounters” with people along the Canadian border compared to over 1.5 million encounters at the Mexican border.
Why it matters: Canada trades more with the US than with the rest of the world combined. A 25% tariff would risk starting a tit-for-tat trade feud, potentially kneecap a quarter of Canada’s GDP, and lead to higher prices for businesses and consumers on both sides of the border.
- Ontario Premier Doug Ford says Canada would have no choice but to retaliate with its own tariffs, a step that Mexico’s government has already threatened to take.
Bottom line: Trump has used the threat of tariffs as a tactic to get concessions from allies before. Economists are divided on whether that’s the case this time around or if the former (and future) president actually plans to follow through on the promise.
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