I’ve just returned from Ottawa where economic anxiety hangs like a storm cloud over Parliament Hill. Three days after President-elect Donald Trump threatened a sweeping 25% tariff on Canadian imports, Premier Doug Ford has publicly called on federal Liberal leadership candidate Mark Carney to develop an immediate counter-strategy.
“We need to hit back and hit back hard,” Ford declared at a manufacturing plant in Oshawa yesterday. The premier’s unusually combative stance reflects growing alarm across Canadian industrial centers, where memories of the 2018 steel and aluminum tariffs still linger painfully in business communities.
Carney, the former Bank of Canada and Bank of England governor who’s positioning himself as the economic heavyweight in the Liberal leadership race, responded cautiously. “We need measured responses, not escalation,” he told reporters in Montreal. “But make no mistake – Canada must be prepared to protect its economic sovereignty.”
The clash represents the first major test for Canada’s political establishment as it confronts the reality of Trump’s return to power. During my conversations with trade officials in Ottawa, I detected a sense of déjà vu mixed with heightened urgency.
“Last time, we had time to build a coalition,” explained a senior trade ministry official who requested anonymity to speak freely. “Now everyone’s scrambling because the timeline appears compressed, and the proposed tariffs are far more extensive.”
Canadian exports to the United States totaled $475.7 billion in 2023, representing roughly 75% of Canada’s total exports, according to Statistics Canada. A 25% tariff across all categories would devastate integrated supply chains, particularly in automotive manufacturing, where components often cross the border multiple times before final assembly.
At the Windsor-Detroit border crossing, where roughly 25% of all Canada-U.S. trade flows, I spoke with logistics manager Sarah Thibault. “We’ve barely recovered from the pandemic disruptions, and now this?” she said, gesturing toward the long line of commercial trucks. “Some of these smaller suppliers won’t survive another trade war.”
The Ford-Carney dynamic introduces a particularly Canadian wrinkle to the crisis. Ford, a conservative populist who has cultivated relations with Trump-aligned Republicans, finds himself in the unusual position of demanding aggressive action from a Liberal leadership hopeful with deep ties to international financial institutions.
“Ford is playing a dangerous game,” notes Elliot Tepper, international affairs specialist at Carleton University. “He’s positioning himself as Trump’s Canadian friend while simultaneously demanding retaliation. That contradiction will become untenable as this progresses.”
Canada’s options for retaliation remain limited by simple mathematics – the asymmetry of power means Canada imports far less from the U.S. than it exports. During the 2018 dispute, Canada imposed targeted countermeasures on $16.6 billion of American goods, matching the value of Canadian exports affected by U.S. steel and aluminum tariffs.
The Trudeau government appears to be pursuing a two-track strategy: diplomatic engagement with incoming Trump administration officials while simultaneously preparing legal challenges through World Trade Organization and USMCA mechanisms.
“We’ll use every tool available to defend Canadian workers,” Deputy Prime Minister Chrystia Freeland stated Wednesday, though she declined to outline specific retaliatory measures. Freeland, who led Canada’s USMCA negotiations during Trump’s first term, has been holding emergency meetings with industry representatives from vulnerable sectors.
Particularly concerning for Canadian officials is Trump’s specific targeting of automobile manufacturing, a sector where integrated production makes separating “Canadian” from “American” products nearly impossible. The Center for Automotive Research estimates that the average North American vehicle crosses the border seven times during production.
“This isn’t just about Canada,” explains Gordon Ritchie, former Canadian ambassador for trade negotiations. “Trump’s proposed tariffs would devastate American manufacturers who depend on Canadian inputs. The ripple effects would hit American workers in Michigan, Ohio, and other swing states that just voted for him.”
The Bank of Canada has already signaled that Trump’s tariff threats may influence its upcoming interest rate decisions, potentially slowing planned rate cuts to buffer against economic uncertainty. A confidential economic impact assessment prepared for cabinet ministers projects that comprehensive tariffs could reduce Canadian GDP by up to 2% in the first year.
From the floor of a steel fabrication plant in Hamilton, where I spoke with workers last week, the human dimension of this trade dispute comes into sharp focus. “We finally got steady work again,” said Miguel Rodriguez, a welder with 23 years experience. “Now everyone’s worried about what happens after January.”
As Premier Ford and candidate Carney position themselves as defenders of Canadian economic interests, the fundamental challenge remains finding leverage against an administration apparently committed to protectionism regardless of the mutual damage it causes.
“The integrated nature of our economies should be our greatest protection,” Carney said yesterday. “But we must be prepared for the possibility that economic rationality won’t prevail.”
