What goes into crafting retaliatory tariffs that can ‘inflict damage’? – National

With just days to go before Donald Trump becomes U.S. president once again, Ottawa has been looking at a list of options that could face retaliatory tariffs if he imposes 25 per cent tariffs on all Canadian goods.

Reports of the potential list began emerging in media reports citing sources in November. In recent days, Canadian outlets including Global News confirmed that there are a range of items currently being considered.

Among those are items like orange juice from Florida and steel from Michigan and Pennsylvania, but those are a small number of examples on the extensive list being considered, Global News has learned.

Experts say a proportional response from Canada to whatever is imposed by Trump is looking likely.

“For sure we’re going to have tariffs imposed on us by the Trump administration. The question now is how long will they last? Canada’s probably going to retaliate because they need to be seen to be doing something,” said Moshe Lander, an economist at Concordia University.

The 2024 Fall Economic Statement, tabled in December after Trump made his threat of tariffs, said Canada’s international trade policy will focus on reciprocity, which “will be considered as a requirement for all federal spending and policies.”

Jack Cunningham, assistant professor at Trinity College at the University of Toronto, said Canada has many cards it could play and retaliate with “relative ease,” but said the key was to make sure Canada’s own economy wasn’t hurt in the process.

He said while the logic of tariffs is to minimize damage on one’s own economy, that is challenging to do with the deep U.S.-Canada trade ties.

“Neither of us can harm the other without harming ourselves because the economies are so interdependent,” he said.

Cunningham said Ottawa could let political logic, instead of economic logic, dictate what to put tariffs on.

“We could look at where a tariff or an export tax would hit the U.S. economy hardest and hit U.S. industries in states where Trump is popular,” he said.

Lander said Ottawa could target products from Republican-leaning states.

“Where is Trump at his weakest? You’re going to want to hit the products in the regions that have the greatest support for Trump. You don’t want to go after the coasts,” he said.

In the 2024 presidential election, Pennsylvania swung from Democrat to Republican.

Lander said Ottawa’s strategy could target swing states.

“If you want to try and inflict damage, then you go after maybe those seven states. Pennsylvania could be one of them, but you could also target Michigan a little bit harder because automobiles in Michigan are also going to have spillover effects into the auto industry in Canada,” he said.

“North Carolina, Arizona, Nevada could also be targets as well.”

This could mean U.S.-made cars could get more expensive to buy in Canada. But in some cases, Canada may even look to impose export tariffs.

“You could try and target Canadians that want to take Vegas getaways and make it expensive for them.  But that’s punishing Canadian citizens. It’s not necessarily damaging the U.S,” he said.

Cunningham said it could also get more expensive for Canadian snowbirds to spend the winter months in the U.S.

“We could even impose a tourist tax on Canadian nationals who will holiday in Florida over the winter in Trump’s home state,” he said, adding that oranges and orange juice from Trump’s home state might also come under Ottawa’s counter-tariffs.

Canada fought back against U.S. steel and aluminum tariffs during Trump’s first term by targeting specific American products like playing cards, ketchup and bourbon to put political pressure on Trump and key Republicans.

Cunningham said some of those products could be in the crosshairs again.

“We could impose retaliatory tariffs on American imports such as Kentucky whiskey and California wine. We could impose export taxes on our exports to the U.S., making them more expensive. We could restrict energy supplies. There’s actually a lot we could do,” he said.

Cunningham said these trade restrictions should be followed up with Canada reaching out to political players in the U.S. other than Donald Trump.

“Go around him. Reach out to governors, senators, congressmen, business leaders in states where his political support is important to him,” he said.

“Lobby them, explain to them how the economic interdependence between the two countries means that anything he does to hurt us, hurts them as well. That’s what we did last time in the renegotiation of NAFTA.”

However, Lander isn’t sure that strategy would work.

“The last time around, there was some strategy targeting Utah and Kentucky because (Republicans) Orrin Hatch and Mitch McConnell were thought to be the two senators that could rein him in. This time around, I’m not sure that anybody is there to rein him,” he said.

Lander said counter-tariffs that raise prices domestically could undercut Canada’s negotiating power for when the CUSMA free trade agreement is up for renegotiations.

However, he said if Canada does impose tariffs, it should not jump the gun. The best time, he said, is to wait until Trump has taken office on Jan. 20.

“If we want to do retaliatory tariffs (we should) wait until there are tariffs on us and then we come back and say, well, you forced our hand. Not the other way around.”

Trudeau and the premiers will meet in Ottawa next week to discuss Canada’s response plan including retaliatory tariffs.

— with files from Global News’ Mercedes Canadian Press

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