Ottawa presses for united front to tackle Trump’s promised tariffs

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Prime Minister Justin Trudeau has taken steps to try to stop Donald Trump’s promised 25-per-cent tariffs on all Canadian goods, convening a meeting Wednesday with provincial premiers, pledging to work through the U.S. president-elect’s demands, and launching a campaign to lobby members of Congress.

Mexican President Claudia Sheinbaum Pardo, by contrast, is taking a defiant approach: She said she will retaliate against any tariff, and demanded that the U.S. do more to crack down on the flow of illegal guns into Mexico and its own domestic market for illicit drugs.

In Washington, meanwhile, policy-makers are trying to discern if Mr. Trump is merely employing a negotiating tactic or starting his promised protectionist overhaul of the U.S. economic system.

These were the responses Tuesday to the president-elect’s surprise announcement the previous evening that he will impose the hefty levies across the board on Canadian and Mexican products as soon as he takes office on Jan. 20.

Their purpose, he said, is to force the U.S.’s two neighbours to stop migrants and fentanyl crossing their borders into the U.S. But some in the American capital speculated that they were actually the opening gambit of Mr. Trump’s plan to renegotiate the U.S.-Mexico-Canada Agreement governing continental trade.

Late on Tuesday, Mr. Trump unveiled Jamieson Greer as his pick for U.S. Trade Representative, the official responsible for negotiating trade deals. Mr. Greer served as chief of staff to Robert Lighthizer, the trade representative in Mr. Trump’s first term and point-man on his protectionist agenda.

Mr. Trudeau said Tuesday that he had “a good call” with Mr. Trump on Monday evening to discuss “how intense and effective connections” are between the two countries.

“We talked about some of the challenges that we can work on together,” the Prime Minister said on his way into a cabinet meeting. “This is something that we can do, laying out the facts moving forward in constructive ways.”

Mr. Trudeau said he also spoke with Ontario Premier Doug Ford to set up a Wednesday afternoon teleconference with the premiers. He said they would use the “Team Canada” approach that the country took during Mr. Trump’s first term to again fight back against his trade threats.

“There’s work to do, but we know how to do it. One of the really important things is that we be all pulling together on this,” he said.

A Canadian government source familiar with the plans said Mr. Trudeau will resurrect the lobby campaign it used in 2017 and 2018. Mr. Trudeau will be encouraging premiers and business leaders to use their U.S. contacts to influence Congress by demonstrating to Americans how unfettered trade is in both countries’ interests, the official said.

The Globe and Mail agreed not to identify the source in order to learn details of the government’s closed-door planning.

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The tariffs would hit the Canadian economy hard because the U.S. is by far Canada’s largest trading partner. In 2023, Canada exported $592.7-billion in goods to the United States – more than 77 per cent of this country’s total exports.

Canadian sectors that would be particularly affected include oil and gas, auto manufacturing, mining and agriculture.

However, the U.S. is also expected to take an economic hit, as the tariffs would be paid for by U.S. importers and likely passed onto consumers in the form of price inflation. About half of U.S. petroleum imports, for instance, come from Canada.

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“A 25-per-cent tariff on oil and natural gas would likely result in lower production in Canada and higher gasoline and energy costs to American consumers while threatening North American energy security,” Lisa Baiton, chief executive officer of the Canadian Association of Petroleum Producers, said in a statement.

Mr. Trump’s promise of tariffs is based on his complaint that Canada is not stopping migrants and fentanyl crossing the border into the U.S. According to numbers from U.S. Customs and Border Protection, in the last fiscal year, U.S. border patrol officers stopped people 23,721 times trying to cross illegally from Canada, more than double the 10,021 the year before. But it pales in comparison with the Mexican border, where border patrol officers stopped people more than 1.5 million times in the same time period.

Similarly, U.S. customs agents seized 43 pounds of fentanyl at the Canadian border last year compared with 21,100 pounds at the Mexican border.

Mr. Ford on Tuesday called Mr. Trump’s move “the biggest threat we’ve ever seen” to the country’s economy. He called for Canada to retaliate with tariffs of its own if Mr. Trump follows through.

“I found his comments unfair. I found them insulting. It’s like a family member stabbing you right in the heart,” he told reporters at the Ontario legislature. “To compare us to Mexico is the most insulting thing I have ever heard from our friends and closest allies.”

Quebec Premier François Legault, however, said retaliation would be folly since his province exports twice as much to the U.S. as it imports. Quebec sends aluminum and aircraft south of the border. “We cannot start a war. We have to do everything we can not to have these tariffs,” Mr. Legault said.

Ms. Sheinbaum said that, if Mr. Trump moves ahead, she would trigger a trade war that would hurt U.S. companies such as auto makers Ford, General Motors and Stellantis, which are all heavily invested in Mexico.

“For every tariff, there will be another in response, and so on, until we jeopardize common businesses,” she wrote in a letter to Mr. Trump, which she read out at a press briefing in Mexico City. “Why impose a tax that puts them at risk? This is unacceptable and would cause inflation and job losses in both the United States and Mexico.”

Ms. Sheinbaum said it was the U.S. that had work to do to stop illegal guns flowing into Mexico and deal with its drug-consumption problem.

“Seventy per cent of the illegal weapons seized from criminals in Mexico come from your country,” she wrote in the letter. “We do not produce the weapons; we do not consume the synthetic drugs. The victims of crime driven by drug demand in your country, unfortunately, are our people.”

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Chuck Grassley, a Republican senator from Iowa, told reporters that he believes the tariff threat is merely “a negotiating tool” related to Mr. Trump’s desire to overhaul the USMCA. That trade deal, which replaced the previous NAFTA, was one of Mr. Trump’s major first-term projects, but he has since become unhappy with it and wants to renegotiate.

Specifically, he has suggested that USMCA did not result in enough new auto plants opening in the U.S. He has also expressed fears of Chinese companies shipping cars and car parts through Mexico to the U.S. to avoid tariffs.

Brian Schatz, a Democratic senator from Hawaii, however, said he is convinced Mr. Trump will make good on the tariff promise because he so fervently believes in economic protectionism. “This is, for him, a high principle. I don’t think there’s any reason to think that he won’t go through with it,” Mr. Schatz said Tuesday.

During the presidential campaign, Mr. Trump promised tariffs of between 10 and 20 per cent on all goods entering the U.S. and of 60 per cent on goods from China.

One industry source said that Mr. Trump could expect a court challenge from U.S. business if he moves forward. One method he has previously floated for quickly imposing tariffs is the International Emergency Economic Powers Act, but the legislation has never been used for this purpose, making it prone to a lawsuit.

The Globe is not naming the source because they were not authorized to speak publicly.

In his first term, Mr. Trump at times used tariffs as a negotiating tactic, such as when he threatened Mexico with them in 2019 to get agreement with his border policies. He also, however, made clear that he thought tariffs were good economic policy, as when he imposed steel and aluminum levies on Canada, only lifting them after nearly a year of Canadian retaliation.

Flavio Volpe, head of Canada’s auto parts industry group, said the country has to be patient. “We’ve seen strong social media posts before and much more reasonable discussion afterwards.”

In Ottawa, Conservative Leader Pierre Poilievre dismissed the premiers’ meeting as a mere photo opportunity. “What we really need is an action plan with tangibles,” he said.

Mr. Poilievre also raised a new scenario that could add to Mr. Trump’s worry about the Canadian border: hundreds of thousands of foreign students who must return to their homes at the end of their study permits.

“They can illegally cross south into the United States,” the Conservative Leader warned during Question Period, “which would be a huge issue.”

With reports from Jeff Gray in Toronto and Nicolas Van Praet in Montreal