Foreign Affairs Minister Melanie Joly attends a first ministers meeting in Ottawa on Wednesday, Jan.15, 2025. Joly will provide an update on Canada's efforts to stop punishing U.S. tariffs this morning following meetings in Washington on border security, trade and investment Thursday.
THE CANADIAN PRESS/Sean Kilpatrick
Ottawa is ready to retaliate if U.S. president-elect Donald Trump slaps Canada with devastating tariffs, Prime Minister Justin Trudeau promised Friday — and his ministers say Republicans in Washington don't fully understand the likely impact of the duties on both countries' economies.
"We will not hesitate to act," Trudeau said at a meeting of the newly formed Council on Canada-U.S. Relations in Toronto. "We will respond and, I will say it again, everything is on the table."
The incoming president has promised to apply 25 per cent across-the-board tariffs on imports from Canada when he returns to the White House on Monday.
Foreign Affairs Minister Mélanie Joly is in Washington this week and met Thursday with Republican Senate Majority Leader John Thune, as well as Republicans Lindsey Graham and James Risch, chairman of the U.S. Senate Foreign Relations Committee. She said tariffs would launch a "trade war" between Canada and the U.S.
"If we need to retaliate, we will do so," Joly told reporters Friday. "The Americans would be starting a trade war against us and this would be the biggest trade war between Canada and the U.S. in decades."
Canada has multiple options for retaliatory tariffs ready to go depending on what Trump ultimately does, said two federal government sources with knowledge of the tariff response plan. They were not authorized to speak publicly about details of the plan.
If Trump sets the tariffs at 25 per cent, Canada’s response would be to impose counter-tariffs worth roughly $37 billion, and possibly follow up with another $110 billion in tariffs. If the duties are lower, Canada's tariff response would be more modest.
No decision will be made until Ottawa sees the wording of Trump's executive order imposing the tariffs.
Energy and Natural Resources Minister Jonathan Wilkinson, who was in Washington this week, said Thursday that Trump's tariff plan isn't even clear to Republican senators and congresspeople.
Wilkinson said he’s heard of three tariff options being considered: 25 per cent tariffs, 10 per cent tariffs and a lower duty that ratchets up over time.
There's been disagreement among the premiers on how Canada should respond if Trump follows through on his threats. Most premiers presented a united front following a meeting with Trudeau in Ottawa earlier this week.
Alberta Premier Danielle Smith broke from the pack by refusing to consider possible levies on oil exports.
Former finance minister Chrystia Freeland, who confirmed her intention to run for the Liberal leadership on Friday, has suggested a dollar-for-dollar tariff response. Trudeau has said he supports the principle of a proportional dollar-for-dollar response.
While Canada has been planning its tariff response for weeks, Republicans only recently returned to Capitol Hill, said Joly.
Joly said she still hopes duties can be avoided by making the case that tariffs would damage both the Canadian and American economies.
"When I talk about the tariffs themselves and their impact, people in Washington are surprised," Joly said Friday. "And when I mention the impacts of a Trump tariff tax on Americans, they are not only surprised, they are very worried."
Goods worth $3.6 billion cross the Canada-U. S. border every day. A Canadian Chamber of Commerce analysis said 25 per cent tariffs could shrink Canada's gross domestic product by 2.6 per cent and America's by 1.6 per cent. It would also disrupt the automotive, agriculture and energy sectors, among others.
"Americans are just waking up to this possibility," Joly said.
Bea Bruske, president of the Canadian Labour Congress (CLC), told The Canadian Press her organization is “very concerned” about the impact of tariffs on jobs.
“We think that this is an all-hands-on-deck moment where government, business, labour needs to come together to navigate how we're going to respond,” Bruske said, adding that workers' voices need to be included in those conversations.
She the sectors most vulnerable to tariffs include manufacturing, mining, the energy sector, agriculture and forestry.
“These are the jobs that are really the backbone of our economy across the country and the different provinces and regions,” Bruske said, adding that job losses in those areas would have spinoff effects on other sectors like retail, education and health care.
She called for a “strong social safety net" so that "if there are job disruptions ... workers can continue to be able to function in the communities that they live in.”
When asked about potential retaliation measures, Bruske said it’s too early to tell what they could look like. She said counter-tariffs could work but a trade war would hurt workers on both sides of the border.
Bruske said the CLC is working with the labor movement in the U.S. to identify opportunities for collaboration.
“Workers are feeling more and more pressure being able to make ends meet and an additional challenge in terms of potential job losses is just one more thing for people to worry about,” she said.
This report by The Canadian Press was first published Jan. 17, 2025.
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