Since our last update, the Trump administration imposed 25% tariffs on Canadian steel and aluminum as of March 12th, while Canada imposed retaliatory tariffs on $29.8 billion in American goods effective March 13th.
We turn our minds this week to President Trump’s threats for April 2nd and the first days of the Canadian response under newly minted Prime Minister Mark Carney, before the country embarks on a widely expected federal election to be launched this weekend, with an expected Election Day of either April 28th or May 5th.
What Are We Expecting for April 2nd?
As we discussed in our last update, President Trump has been promising global “reciprocal” tariffs on April 2nd. As such, Trump 2.0 administration officials are said to be preparing tariffs on “trillions” of dollars in imports.
Since the imposition of the steel and aluminum tariffs, Premier Doug Ford, along with federal Ministers Dominic LeBlanc and François-Philippe Champagne met with US Commerce Secretary Howard Lutnick on March 13th to bring down the temperature following Ontario’s since-walked back 25% surcharge on its hydroelectricity exports, which had been briefly met by a threatened 50% American tariff on Canadian steel and aluminium.
Canadian officials had expressed hope for this Washington D.C. meeting to be a breakthrough in resetting our crucial trading partnership and avoiding additional tariffs.
However, the Ontario Premier instead advised that the US indicated behind closed doors its plans to go forward with April 2nd global tariffs, “creating a need for Canada to shift its focus to making sure it is first in line for exemptions”. Ford continued, “I can tell you what they want. They are going to put a global tariff on the whole world on April 2nd. What we are working at is making sure we are first in line for exemptions, and we told the administration very clearly how we feel these tariffs are going to hurt the American people. Yes, it is going to hurt Canada, but it is going to hurt the American people.”
In defending his quick reversal on his strategy to impose the hydroelectricity surcharge, the Premier insisted that if he hadn’t been willing to slap the tax on electricity the “meeting would have never happened” and “we would have been going back and forth, tit for tat” in a perpetual cycle of escalation. “We left there knowing what the US wants,” he said.
Meanwhile on Trump’s 51st state threat, the Premier said, “I'd kind of flip this around. What a compliment. We'll never be a 51st state. Canada's not for sale. But isn’t it nice that someone thinks we have the greatest country in the world, and they want access? My simple answer to that is, you want access. Let's build an Am-Can fortress.”
Ontario Lieutenant-Governor Edith Dumon swore in Premier Ford’s new Cabinet on Wednesday, which remains the same size as prior to the election, and with one new face. The Premier said the Cabinet will be focused on the economic threats to Canada, calling them “one of the most pressing and significant challenges in the history of our province.”
Now with April 2nd fast-approaching, Treasury Secretary Scott Bessent is similarly indicating that the current Trump administration thinking is a single, country-specific tariff rate for each of the US’ trading partners, along with an opportunity for countries to avoid them by lowering their own tariffs or addressing other American grievances: “What’s going to happen on April 2nd, each country will receive a number that we believe represents their tariffs. So, for some countries, it could be quite low, for some countries it could be quite high.”
Mr. Bessent went on to say, “We are going to go to them and say, ‘Look, here’s where we think the tariff levels are: non-tariff barriers, currency manipulation, unfair funding, labour suppression, and if you stop this, we will not put up the tariff wall.’”
Mr. Bessent also optimistically suggested that many tariffs will not go into effect because countries will agree to change their own import duties before the April 2nd announcement.
It is not clear through which legal authority the President will invoke the tariffs. The plan could return the average American tariff to its early 1930s level of 20 percent.
The Wall Street Journal reports that this plan for April 2nd follows a previous plan to “simplify putting tariffs on hundreds of US trading partners by sorting nations into one of three tariff tiers (high, medium, low).”
President Trump Enters Canada’s Imminent Federal Election
During a Fox News interview this week, President Trump asserted that he does not care that his administration’s actions against Canada could be propelling the Liberal Party to win the next federal election, which is widely-anticipated to be called in the days ahead, and with the Trump administration front of mind for many Canadian voters: “I think it’s easier to deal, actually, with a Liberal and maybe they’re going to win, but I don't really care. It doesn’t matter to me at all.”
With respect to Conservative Party of Canada leader Pierre Poilievre, the President said, “The Conservative that’s running is, stupidly, no friend of mine. I don’t know him, but he said negative things. When he says negative things, I couldn’t care less.”
Mr. Poilievre has responded online by suggesting that this proves he is better suited to negotiate with the President than Prime Minister Carney: “Last night, President Donald Trump endorsed Mark Carney. Why? Because, as Trump said, he's ‘easier’ to deal with, and knows that I will be a tough negotiator and always put Canada First.”
Then at a press conference, Mr. Poilievre said, “It's true. I'm a strong leader, I'm a tough guy to deal with, I'm firm in my convictions and I'll always put Canada first.”
He went on to say the Liberals have “blocked resource projects, hiked taxes and driven a half-trillion dollars of investment to the US. Mark Carney will back down and his Liberal policies will keep Canada weak.”
When Will the First Trump-Carney Point of Contact Occur?
In a symbolic decision, Prime Minister Carney visited his British and French counterparts in their capitals, before making an Arctic security announcement in Iqaluit on a whirlwind 36-hour inaugural international trip, rather than trying to secure a meeting at the White House. The trip was intended to play up Canada’s British, French, and Indigenous roots in the face of the trade war with our American neighbours.
As of the time of writing, PM Carney has not yet spoken with President Trump. The Prime Minister has said he is no rush to do so, and is not “consumed by President Trump’s daily ‘initiatives’,” focused instead on building a stronger and more diversified Canadian economy.
Prime Minister Carney has said the “starting point” of an expected future call with Trump will be for the President to reaffirm Canadian sovereignty: “I look forward to having, at the appropriate time, a discussion between two sovereign nations that is comprehensive and not targeted at one issue. There’s a wide range of issues to be discussed when we do connect,” Carney said.
Canada’s Ambassador to Washington, Kirsten Hillman, has said the conversation will not happen right away, but will “come when the time is right.”
On what Prime Minister Carney believes President Trump is seeking from this trade war? “An end to the fentanyl crisis in the United States. I respect that. He wants good, high paying jobs in America. He wants more investment in America. He wants repatriation of many American industries and firms to the United States and I fully respect that,” Carney said.
“I think he will respect that as Prime Minister of Canada, I want to end the fentanyl crisis in Canada. I want to grow good, high paying jobs in Canada. And, of course, I want to protect with my colleagues and reaffirm and reinforce our sovereignty of all of Canada. So that’s the starting point for the discussion.”
Carney also said the Trump administration’s tariffs have put into question the validity of CUSMA and our security relationship with the United States: “That means that we should have a broader conversation. A broader conversation about our commercial relationship, which also involves a conversation about our security relationship with the United States,” the Prime Minister said.
Defence Announcements by Prime Minister Carney
With respect to our security relationship with the Americans, the announcement in Iqaluit pertained to what would be Australia’s biggest defence export ever should it be seen through. Canada intends to partner with Australia to develop advanced Over-the-Horizon Radar technology, which would constitute “an investment of more than $6 billion that will provide early warning radar coverage from threats to the Arctic.” The funding itself is not new, having previously been allocated for this purpose but not yet spent.
Australian news is reporting that this technology had initially been intended to be sold to the United States, but following a conversation this week between Prime Minister Carney and Australian Prime Minister Anthony Albanese, that changed – “with the United States continuing its campaign of tariffs on foreign nations, Prime Minister Anthony Albanese said it was good for Australia to ‘diversify’ its trade relationships.”
Prime Minister Carney also announced in Iqaluit that Canada will take on a greater, sustained year-round Canadian Armed Forces presence in the Arctic, at a cost of $420 million.
Also on the defence procurement front, the New York Times is reporting that Canada is in “advanced talks” with the European Union to join their new military industrial project, a “move that would allow Canada to be part of building European fighter jets and other military equipment at its own industrial facilities” in Canada.
Two officials, one from the European Union and one from Canada, with direct knowledge of the discussions said detailed talks were underway to incorporate Canada into the European Union’s new defense initiative. The goal is to boost the E.U.’s defense industry and eventually offer a credible alternative to the United States, which is now dominant.
This follows a recent call between Prime Minister Carney and Ursula von der Leyen, President of the European Commission, on Sunday, in which military industrial cooperation was discussed.
Foreign affairs Minister Mélanie Joly confirms that “we've been in talks with the European Union to make sure that we could work on defence procurement together.” She continues, “I think it's yielding toward good news because ultimately we need to make sure that we can be closer to the Europeans … including defence procurement.”
The Prime Minister has also ordered a review of Canada’s plan to purchase 88 F-35 fighter jets from the US-based firm Lockheed Martin. Canada has signed an agreement for $19 billion to buy the first 16 jets, with options on the remainder. Prime Minister Carney has said that Canada reserves the right to not exercise those purchase options.
On Wednesday, the Prime Minister met virtually with the Council on Canada-US Relations, followed by his first Canada-US Relations and National Security Cabinet Committee meeting as Chair of that committee. Along with that Cabinet committee, the Prime Minister has now stood up at three other Cabinet committees –Treasury Board, Operations, and the Incident Response Group.
Finally this week, PM Carney is expected to convene a virtual First Ministers Meeting, focused on Canada-US trade. He met with Alberta Premier Danielle Smith in Edmonton on Thursday.
Buy Canadian
Statistics are now confirming the anecdotal – the Canadian boycott of US travel destinations since President Trump’s threats and actions with respect to Canada is real.
US Customs and Border protection data shows nearly 500,000 fewer travellers crossed the land border from Canada into the US this February compared to the same month last year. The cross-border travel flow has reached the lowest level since April 2022, when COVID travel-related restrictions were still in effect.
Meanwhile, US tour operators are reporting booking declines of as much as 85%, and domestic grocery product sales have increased by 10%.
