Canadian Prime Minister Trudeau Says Ottawa Would Retaliate in Event of 25% U.S. Tariff -- Update

By Paul Vieira

OTTAWA--Canadian Prime Minister Justin Trudeau said Ottawa would retaliate with its own set of tariffs should President-elect Donald Trump follow through on his pledge to slap a 25% levy on imports from Canada.

"We will, of course, as we did eight years ago, respond to unfair tariffs in a number of ways, and we're still looking at the right ways to respond," Trudeau said Monday at an event organized by the local chamber of commerce in Halifax, Nova Scotia.

The Canadian leader said there are signs that Americans "are beginning to wake up to the reality that tariffs on everything from Canada would make life a lot more expensive for Americans."

Late last month, Trump said he would impose a 25% tariff on imports from Canada and Mexico unless the countries did more to stem the flow of migrants and illegal drugs at the border into the U.S.

Trudeau met with Trump shortly afterward at his private club in Florida.

Over dinner, Trudeau and Trump discussed trade and the border. According to people at the dinner, Trudeau complained about the impact the tariffs would have on Canada's economy. Trump interjected, and said if the Canadian leader didn't like it, Canada could become America's 51st state.

"I'm a big believer in tariffs," Trump said in an interview with NBC's Meet the Press broadcast on Sunday. "We're subsidizing Mexico and we're subsidizing Canada and we're subsidizing many countries all over the world. And all I want to do is, I want to have a level, fast, but fair playing field."

In 2018, the Trump administration imposed tariffs on imported steel and aluminum, including from Canada. The Trudeau government retaliated at that time with targeted levies on certain U.S.-made goods in an effort to apply pressure on members of Congress from key U.S. states. Some of the products targeted included bourbon from Kentucky, motorcycles produced at Harley-Davidson factories in Wisconsin, and ketchup in Pennsylvania.

Those tariffs, ultimately dropped in 2019 after a deal with the Trump White House, were "politically impactful to the president's party and colleagues ... We were able to punch back in a way that was actually felt by Americans," Trudeau said.

The U.S. and Canada have one of the world's largest trading relationships, with annual two-way trade of nearly $1 trillion, according to the latest data from the U.S. Trade Representative. Nearly three-quarters of all Canadian exports are U.S. bound, and economists warn a 25% tariff would most likely trigger a recession in this country.

Forecasting firm Oxford Economics calculates that the 25% tariff, coupled with retaliatory levies from Canada, would cause Canada's gross domestic product to fall 2.5% from peak to trough by early 2026.

Write to Paul Vieira at [e-mail]

(END) Dow Jones Newswires

12-09-24 1602ET