MONTEBELLO, Que. – Justin Trudeau says his planned response to U.S. President Donald Trump’s tariff threats is designed to shield Canadians from unintended blowback.

The prime minister described the contours, if not the details, of the government’s multi-stage retaliation strategy on Tuesday at the Liberals’ cabinet retreat in Montebello, Que. In doing so, he acknowledged there’ll be no avoiding some negative effects.

Opening moves

Nearly US$350 billion in goods and services crossed Canada’s border over the first three quarters of 2024, TD economists estimate. 

As Canada is America’s largest export market, Trudeau supports the principle of dollar-for-dollar matching tariffs if Trump makes good on his plans. The price of that retaliation, however, will ultimately be passed on to Canadian consumers, he said. 

“There will be costs for Canadians if we move forward on tariffs to the United States,” Trudeau said.  

That’s why Ottawa will be looking to target American products with plenty of alternatives on the domestic market, so Canadians can choose not to pay more, he said. During the trade dispute with the previous Trump administration in 2018, the government slapped tariffs on ketchup, which meant the cost of Heinz went up, but the price of French’s, which was made with Canadian tomatoes, stayed the same.

Worst-case scenario

If targeting market pinch points in the U.S. doesn’t do the job, Canada is prepared to scale up its response, Trudeau said. 

“The goal will be to get those tariffs off as quickly as possible, and in order to do that everything is on the table,” he said. 

Ontario Premier Doug Ford has backed the idea of blocking energy exports to the U.S. (to the dismay of two Prairie premiers) but the dependence of America’s manufacturing sector on other Canadian industries is in play as well. 

Internal Trade Minister Anita Anand said cabinet is looking at the Canadian natural resources, raw materials, manufacturing and services that go into American-made products and the U.S. supply chain. 

The negotiation will include an analysis of how important Canadian goods and services are to the things America builds and exports, she said. “It’s a symbiotic relationship.” 

Similarly, Innovation Minister François-Philippe Champagne said he warned a U.S. governor recently to “be nice” to Canada, because 80 per cent of semiconductors in America are packaged and tested in this country. 

The prime minister’s office has also circulated documents at the cabinet retreat highlighting America’s reliance on Canadian potash and refined zinc.

They hope those conversations will deter the tariffs entirely. If that doesn’t happen, Trudeau promised Canadian businesses would be compensated. The form and amount of compensation will depend on what Trump does, and how Canada ultimately decides to respond.