(Bloomberg) -- Prime Minister Justin Trudeau said Canada “will respond” if US President-elect Donald Trump imposes new tariffs on Canadian imports, and argued that retaliatory tariffs were successful when Trump put tariffs on Canadian steel and aluminum in 2018.
Trump has threatened to impose across-the-board 25% tariffs on Canadian and Mexican imports on the first day of his presidency unless both countries crack down on the flow of migrants and fentanyl into the US.
“Let’s not kid ourselves in any way, shape or form: 25% tariffs on everything going to the United States would be devastating for the Canadian economy,” said Trudeau, speaking to the Halifax Chamber of Commerce. But he said the tariffs would also raise costs on a wide range of goods the US gets from Canada.
Canada will “respond to unfair tariffs in a number of ways, and we’re still looking at the right ways to respond, but our responses to the unfair steel and aluminum tariffs were what ended up lifting those tariffs last time,” he said.
Shortly after Trump announced the tariffs on Canadian steel and aluminum in the spring of 2018, Canada rolled out retaliatory tariffs on targeted, politically sensitive items such as “bourbon and Harley Davidsons and playing cards and Heinz ketchup,” Trudeau said.
The tariffs were “politically impactful to the president’s party and colleagues,” and that was how “we were able to punch back in a way that was actually felt by Americans,” Trudeau said.
The Canadian prime minister cautioned that Trump should be taken seriously when he threatens to impose tariffs, but said history has shown Trump can have other motivations as well. “His approach will often be to challenge people, to destabilize a negotiating partner, to offer uncertainty and even sometimes a bit of chaos into the well-established hallways of democracies and institutions,” Trudeau said.
“One of the most important things for us to do is not to freak out, not to panic,” Trudeau said, arguing Canada will need a thoughtful and united approach to reach an agreement with Trump and avoid harming both economies.