Canada Prepares for Trump Tariff Threat with Three-Step Plan

Orange juice from Florida. Whiskey from Tennessee. Peanut butter from Kentucky.

Canada is gearing up for an all-out trade war with its closest ally and one of its best The list of trading partners and American goods that could be affected is long.

Canadian officials are preparing a three-stage plan for retaliatory tariffs and other trade restrictions against the United States, which will be triggered if President-elect Donald J. Trump follows through on his threat to impose a 25 percent tariff on all Canadians. Goods imported into the United States.

Canadian officials will wait until Mr Trump takes action, which he says will be on Monday, his first day in office, before starting to impose the tariffs. They will mainly affect C$37 billion ($25.6 billion) worth of consumer goods, according to two senior government officials familiar with the plans.

They spoke on condition of anonymity to discuss details of the plans, which are being kept private for now.

Goal: Maximum political pain

Canadian officials have said that their product choices must be precisely targeted and focused on political influence. In particular, they want to focus on goods manufactured in Republican or swing states where the pain of tariffs, such as pressure on jobs and incomes of local businesses, will affect Trump allies.

The Canadian government hopes those allies, including governors or members of Congress, will then pick up the phone and call Mr. Trump to intervene in favor of de-escalation.

Canadian Foreign Minister Melanie Jolie, who spent Thursday and Friday in Washington, met with several Republicans, including Sen. Lindsey Graham of South Carolina, Sen. Jim Risch of Idaho and Senate Majority Leader John Thune, to defend her country. South Dakota.

Ms. Jolie said she hoped her outreach to top Republicans would persuade them to intervene to prevent or limit the trade war and its negative impact on consumers and jobs on both sides of the border.

“My job here is to be able to talk about the facts, and that comes before any threat of counter-tariffs from our side,” Ms Jolie told The Times in an interview on Thursday. “Because then senators might say, ‘Well, why are we doing this?’ Why do we apply tariffs? This affects my own constituency.”

But he added that Canada is ready to defend its interests by force if necessary. “Never underestimate Canadians,” he said. “We are fighting very seriously and are very brave. We are ready to be surgical and fit to influence American affairs.”

Prime Minister Justin Trudeau and his cabinet will gather Monday and Tuesday in what some are calling “the war room of the United States,” considering Mr. Trump’s first day in office and what it might bring for Canada. Respond quickly if US tariffs are announced.

The detailed list of goods is being closely guarded, but it includes dozens of consumer goods from various categories such as food and beverages, as well as other everyday products, including dishwashers and porcelain products such as bathtubs and toilets.

Depending on which Canadian goods Mr. Trump chooses to impose tariffs on and at what level, Canada’s second step would be to extend its tariffs to more American products, affecting about C$150 billion worth of U.S. imports.

As part of its strategy, the Canadian government is also considering other measures to limit the export of Canadian goods to the United States, such as export quotas or tariffs on the American side. Such a measure applies to particularly sensitive Canadian exports that the United States relies on, such as hydroelectricity from Quebec, which is used to power New England.

Tariffs work more like taxes on goods and are usually passed on to consumers. They make imported goods more expensive, which often means that consumers stop buying them, ultimately hurting the foreign companies that export them.

Trade restrictions, such as export quotas, aim to limit the availability of an exported good and are particularly effective when the importing country does not have readily available or sufficient alternative sources for that good.

Back off the cliff

Regardless of how Canada’s counter-tariffs or export restrictions are implemented, the goal will be the same: to pressure the Trump administration to back down from the president-elect’s pledge to launch a devastating trade war with the US’s neighbor.

The trade relations between the two countries are very large, about 1 trillion dollars of goods are exchanged every year. Canada jostles with Mexico as the US’s largest trading partner, depending on the price of oil.

Some cross-border industries are so integrated that tariffs would suddenly create a major regulatory headache for many companies. For example, a single car crosses the US-Canada border eight times before it is fully assembled. The tariffs will immediately shut down the assembly lines in Ontario, the heart of the auto industry in the United States and Canada.

And Canada exports vital goods to the United States of America. 80 percent of Canada’s oil and 60 percent of its natural gas is exported to the United States. More than half of the oil imported into the United States comes from Canada.

If the trade war between the US and Canada escalates, and the Canadian government wants to avoid it, the third and final level of escalation will limit the export of hundreds of billions of dollars worth of sensitive commodities, including oil and gas, potash, uranium and critical products. minerals. All are very important exports to the United States

Alberta, Canada’s oil-exporting powerhouse, said it did not support measures that would affect its core industry. If Canada decides to use oil as leverage against the United States, the rift between the province’s leadership and the rest of the country could be exacerbated.

Canada’s plans for a potentially protracted U.S. trade war include supporting domestic industries, according to one senior official.

The government is preparing to provide financial assistance for Canadian businesses hit hard by U.S. tariffs, likely in every case, the official said.

While bailouts or blanket funding for all industries are not on the table, the official said it would be unthinkable to let a tariff war with the U.S. destroy thousands of jobs and businesses without the government stepping in to soften the blow.