Canadian Retaliatory Tariffs on US Resurfacing: A Look Back on Past Success

January 9, 2025 TruthUSA

News Analysis

The inauguration of U.S. President-elect Donald Trump is approaching, and there are signs that he is not satisfied with Canada’s response to his threat of imposing a 25 percent tariff on Canadian goods.

On the contrary, Trump repeated this week that he would impose “very serious” and “substantial” tariffs on Canada, as well as threatening to use “economic force” to merge Canada with the United States.

With the deadline of Jan. 20 approaching, senior officials in the Canadian government have begun speaking anonymously to the media about Canada’s plans for retaliation.

One official told The Canadian Press that U.S. products such as steel, ceramics, and plastics could face tariffs, but a decision on retaliatory measures has not yet been made. The first ministers are scheduled to meet in Ottawa next week to discuss potential retaliation.

Trump has connected his tariff threat to concerns about illegal migration and drug smuggling at the Canadian border. In response, Ottawa has prepared a $1.3 billion border security plan.

Canadian officials are also utilizing different channels outside of state-to-state diplomacy to prevent the tariff threat. Prime Minister Justin Trudeau was in Washington on Jan. 9 to attend the funeral of former U.S. president Jimmy Carter, as well as to have scheduled meetings with business leaders.

During his first term, Trump imposed tariffs on Canadian steel and aluminum, without the rhetoric of making Canada the 51st U.S. state.

In justifying the tariffs in 2018, Trump stated that the importation of those products into the U.S. in large quantities would weaken the internal economy and threaten national security.

Trump’s “America first” agenda includes economic nationalism to strengthen the U.S. industrial base.

After the U.S. tariffs were implemented in June 2018, Canada introduced countermeasures beginning in July of that year.

A long list of U.S. steel and aluminum products were hit with a 25 and 10 percent surtax, respectively.

Another list of products including food, household items, and appliances were subject to a 10 percent tariff.

Food items on the list included yoghurt, coffee, maple syrup, pizza, orange juice, ketchup, mayonnaise, and certain types of whiskies.

Household items targeted by the countermeasures included tableware, kitchenware, toilet paper, toilet articles, stoves, ranges, refrigerators, dishwashers, and lawn mowers.

In May 2019, Canada and the U.S. reached an agreement to lift their respective measures. Both countries committed to preventing the importation of subsidized or unfairly priced steel and aluminum, as well as stopping the transshipment of such products made outside of Canada or the U.S. to the other country.

During the period of tariffs, there was a significant impact on trade.

According to Statistics Canada, steel exports to the U.S. dropped by over 37 percent immediately after the tariffs were imposed.

“While monthly export movements varied for the remainder of the tariff period, the overall impact was negative, with the value of exports in May 2019 hitting its lowest level in nearly a decade,” said StatCan.

Canada saw a substantial increase in the duties collected from the surtax during this time period, from an average of almost $47 million monthly in 2017 to nearly $190 million after the tariffs were put in place.

Similarly, the U.S. experienced a significant growth in the amounts of duties collected on Canadian steel and aluminum, rising from over $24 million per month in 2017 to an average of $205 per month during the tariff period.

The U.S. and Canada share the world’s longest undefended border, with almost $3.6 billion in goods and services crossing it daily.

The Canadian Press contributed to this report.

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