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Trump's tariff whiplash aimed at sowing chaos: Justin Trudeau

Jan 22, 2025 04:55 AM IST

Canadian PM Justin Trudeau accused US President Trump of creating uncertainty among trading partners to weaken negotiations.

Canadian Prime Minister Justin Trudeau, in sharp remarks, said that US President Donald Trump is trying to create uncertainty in his trading partners to knock them off-balance and weaken their negotiating position.

Prime Minister Justin Trudeau delivers remarks before chairing the meeting of the Council on Canada-US Relations, in Toronto.(AP)
Prime Minister Justin Trudeau delivers remarks before chairing the meeting of the Council on Canada-US Relations, in Toronto.(AP)

Trump sparked volatility in currency markets on Monday by signaling that his administration may impose tariffs of up to 25% on Mexico and Canada as early as February 1. This move appears to contradict an executive order he signed, directing US officials to review trade and border relationships and report back by April 1.

Canadian Prime Minister Justin Trudeau responded to Trump's comments, saying, “We know that there is always going to be a certain amount of unpredictability and rhetoric coming out from this administration.” Trudeau also acknowledged Trump's negotiating style, calling him a “skilled negotiator and will do what he can to keep his negotiating partners a little off balance.”

Mexican President Claudia Sheinbaum echoed Trudeau's sentiments, stating, “It’s important to always keep a cool head and refer to the signed orders beyond the actual rhetoric.”

Trudeau's government is prepared to take action if Trump imposes tariffs, promising to “support and compensate” Canadian citizens and businesses affected by the tariffs. Canada has also prepared a list of retaliatory tariffs against US-manufactured items, which could be implemented if Trump moves forward with broad tariffs.

Cost of retaliation

However, retaliation would come at a significant cost for Canada, potentially pushing up costs for consumers and businesses and worsening the economic blow. A 2019 Bank of Canada report estimated that a 25% tariff imposed by the US could lead to a 6% drop in Canada's GDP.

Trudeau emphasized that “everything is on the table” and supports dollar-for-dollar matching tariffs. Mark Carney, a candidate to replace Trudeau as Liberal Party leader, called Trump's tariffs “illegal” and also supports dollar-for-dollar retaliation.

The Canadian dollar initially plummeted after Trump's comments but recovered most of its losses on Tuesday. Trudeau remains optimistic, saying, “We’ve been here before... Our focus is on the substance of things, where Canada and the US do well when we do things together.”

The Canadian Chamber of Commerce also expressed caution, stating they will “take the President’s comments seriously, but not always literally.” Heather Exner-Pirot, a senior fellow at the Macdonald-Laurier Institute, noted that Trump's tariff plan may be impossible to fulfill, as it would contradict his other promises, such as lowering the cost of living for Americans.

Meanwhile, Alberta Premier Danielle Smith broke ranks with Trudeau, opposing the idea of threatening to curb Canada's energy exports to the US or levying export taxes. Smith argued that this approach would drive up prices for American consumers and businesses, ultimately harming both countries.

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