Toronto. Canada is already examining possible retaliatory tariffs on certain items from the United States should President-elect Donald Trump follow through on his threat to impose sweeping tariffs on Canadian products, a senior official said Wednesday.

Trump has threatened to impose tariffs on products from Canada and Mexico if the countries don't stop what he called the flow of drugs and migrants across southern and northern borders. He said he would impose a 25 percent tax on all products entering the US from Canada and Mexico as one of his first executive orders.

A Canadian government official said Canada is preparing for every eventuality and has started thinking about what items to target with tariffs in retaliation. The official stressed no decision has been made. The person spoke on condition of anonymity as they were not authorized to speak publicly.

When Trump imposed higher tariffs during his first term in office, other countries responded with retaliatory tariffs of their own. Canada, for instance, announced billions of new duties in 2018 against the US in a tit-for-tat response to new taxes on Canadian steel and aluminum.

Many of the US products were chosen for their political rather than economic impact. For example, Canada imports $3 million worth of yogurt from the US annually and most comes from one plant in Wisconsin, home state of then-House Speaker Paul Ryan. That product was hit with a 10 percent duty.

Another product on the list was whiskey, which comes from Tennessee and Kentucky, the latter of which is the home state of then-Republican Senate leader Mitch McConnell.

Trump made the threat Monday while railing against an influx of illegal migrants, even though the numbers at the Canadian border pale in comparison to the southern border.

The US Border Patrol made 56,530 arrests at the Mexican border in October alone -- and 23,721 arrests at the Canadian one between October 2023 and September 2024.

Canadian officials say lumping Canada in with Mexico is unfair but say they are happy to work with the Trump administration to lower the numbers from Canada. 

Trump also railed about fentanyl from Mexico and Canada, even though seizures from the Canadian border pale in comparison to the Mexican border. US customs agents seized 43 pounds of fentanyl at the Canadian border last fiscal year, compared with 21,100 pounds at the Mexican border.

Canadian officials argue their country is not the problem and that tariffs will have severe implications for both countries.

Canada is the top export destination for 36 U.S. states. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day. About 60 percent of US crude oil imports are from Canada, and 85 percent of US electricity imports are from Canada. Canada is also the largest foreign supplier of steel, aluminum and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager for and investing in for national security.

“Canada is essential to the United States’ domestic energy supply,” Deputy Prime Minister Chrystia Freeland said.

Trump has pledged to cut American energy bills in half within 18 months, something that could be made harder if a 25 percent premium is added to Canadian oil imports. In 2023, Canadian oil accounted for almost two-thirds of total US oil imports and about one-fifth of the US oil supply.

Prime Minister Justin Trudeau is holding an emergency virtual meeting on Wednesday with the leaders of Canada's provinces, who want Trudeau to negotiate a bilateral trade deal with the United States that excludes Mexico.

Mexican President Claudia Sheinbaum said Wednesday that her administration is already working up a list of possible retaliatory tariffs “if the situation comes to that.”

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