As we previously discussed, U.S. President Donald Trump had announced tariffs targeting Canada, Mexico, China, and the European Union. Initially, U.S. tariffs on Canadian goods were scheduled to take effect on February 4th, with a 25% tariff on non-energy products and a 10% tariff on energy products. However, recent developments reveal that these tariffs have been postponed for three months following discussions with Canadian and Mexican leaders.For goods coming out of Canada into the US, the tariffs were meant to encourage Americans to “buy American.”, but also to force Canada to deal with a number of serious issues causing threats the US. These threats including drugs, chiefly fentanyl, illegal immigration, unfair trade practices, and money laundering. Realizing that the United States relies heavily on Canada for oil, President Trump announced that he will be imposing a 10% tariff on Canadian energy products. The reaction from Canada’s leaders, however, has been somewhat divided, adding a layer of frustration and confusion to the whole ordeal. US President Trump said there is nothing Canadian officials can do to prevent him from imposing tariffs on goods coming from Canada into the US. However, to save our own economy, there must be things our government can do to help ease the burden our country will inevitably face. In light of a new federal and provincial elections approaching this year across Canada and Ontario, Canadians should be aware of what their leaders are doing to help put Canada first in this battle.&nbsp;Something we have seen is a massive tug of war between Alberta Premier Danielle Smith and Ontario Premier Doug Ford. The immediate reactions from each premier have been starkly different. While Doug Ford has been ready to retaliate against Donald Trump by shutting off their power supply and has been very vocal about his opposition to Donald’s tactics, Danielle Smith went to Mar a Lago to meet with Donald Trump and Kevin O’Leary to push diplomacy. Danielle Smith was very vocal about her opposition to retaliatory threats to the US, especially regarding Alberta’s oil. Instead, she wants to try to convince President Trump to buy more. Smith has specifically stated that any retaliatory measures will not include export taxes on oil and gas nor will it include cutting off oil supply. Resources are a provincial matter and so she is standing on solid ground.The response from Doug Ford seems to be more favoured by Ontarians and non-Ontarian Canadians alike. Ford is advocating for a Team Canada approach, similar to Canada’s likely next Prime Minister Pierre Poilievre, and wants to put Canada first. Ford has made it clear that he would fully support a decision to impose retaliatory tariffs and has said he has no problem cutting off energy supply to states like Michigan, New York, and Wisconsin, who rely on Canadian energy sources. (He seems to forget that the pipelines that supply Ontario and Quebec with oil from Alberta, first run through the US, however, he was on a roll.) Interestingly, Ford has decided to call an election on February 27th, a move that might benefit him if he continues tough talk. The other parties’ provincial leaders have not done much to make themselves known nor have they done anything to make themselves stand out; it seems the only visible candidate in Ontario is Doug Ford. He also has high stakes. Auto makers have already announced that 1,500 jobs will leave Ontario to the US in the next year. He has to draw his line in the sand now.&nbsp;While initiating a trade war seems like an extreme and highly unproductive action, the threat may motivate us to take steps that will help Canada over the long haul. We are proud Canadians; however, we acknowledge that we are far from innocent. Canada has a serious drug crime problem and that poses a threat to the US. As the National Post reported; “Canada now a 'low-risk, high-profit' hot spot for fentanyl super labs - a sore spot for Washington”. Recent busts in&nbsp;Falkland, BC, Valleyview, Alberta and Smithville, Ontario, where super labs were taken down prove the point. If President Trump’s threats cause us to deal with this it’s great news. Soft on Crime policies have made Canada a world-class money laundering designation. And in what has been an open secret, Canda did little if any vetting of immigrants over the past few years. Tightening that process will help everyone on both sides of the border.Supply Management, a real sore point for Americans, adds an estimated $500 a year to every Canadian’s grocery bill. Another win, win if it is dealt with. Interprovincial trade barriers are almost as punishing as what President Trump is proposing. National Bank estimates that the cost of these is equivalent to a 21% tariff. Most Canadians don’t even know they exist. If we are motivated to address these now, another win.&nbsp;What definitely feels like necessity cloaked as virtue, everyone is suggesting that we diversify our trade and look for new markets. (While we’re pretty sure that has been thought of before and would have been actioned if it was easy, why ruin a good story.) The value of the Canadian dollar certainly makes our goods more attractive than they have ever been.It seems that Canada is fragmented in its approach to the tariffs. However, if this situation, as unpleasant as it is to deal with, helps us to fix our issues and focus on a better Canada, the 43% of young Canadian’s 18 to 34 that are open to becoming the 51st State may reconsider. If not, this may be the beginning of a slow, but inevitable decline. Demographics suggest that older Canadians (and NDP voters) like Canada just the way it is. Younger ones looking forward understand that changes need to be made. This is actually very encouraging as it says the younger generation is more interested in opportunity than free stuff from the government. There is hope.Canada has announced that it would levy retaliatory tariffs in two phases; 25% on $30 billion in trade on Tuesday, and an additional $125 billion in 21 days’ time. Ontario, and a few other provinces, have announced that they will be removing US alcohol from store shelves. (According to the Ontario government’s own web site, a 750 ml bottle selling in the LCBO for $39.95 actually costs $21.55; the rest is tax. Perhaps they can deal with that too if they already have the books out.)The Bank of Montreal has adjusted its interest rate forecast and now sees the possibility of six more quarter point cuts in the Bank of Canada’s policy rate over the course of 2025. This would bring the rate to 1.5% by year end. Beyond the tariffs noted above, the federal government is expected to respond in the manner that they know best; a program of printing money and sending out cheques. The combination of lower rates and more money printing took housing prices to all time highs during Covid.&nbsp;Canada’s fragmented response to the U.S. tariffs reflects the complexities of balancing economic, political, and diplomatic priorities. However, this challenging situation could prompt much-needed reforms. Addressing crime, trade inefficiencies, and economic vulnerabilities might lead to a stronger Canada. Yet, with 43% of young Canadians reportedly open to closer integration with the U.S., the path forward remains uncertain.&nbsp;Will this crisis galvanize Canada to rise to the occasion, or will it signal the beginning of a gradual decline? Only time will tell.

Canada’s Response to President Trump’s Tariffs

Find out how Canada's response to postponed US tariffs could shape its future. A closer look at leadership actions, trade impacts, and potential opportunities.

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