As the sun rises on the new Trump presidency in Washington, DC, multiple US news outlets are reporting that countries — including Canada — will reportedly be spared the wrath of The Donald on his first day in office.
The incoming forty-seventh president was reportedly set to sign off on a flurry of executive orders within minutes of taking office to impose sweeping tariffs on America’s largest trade partners, including Canada, Mexico, and China.
But Reuters reported that the incoming POTUS instead issued a memo to affected agencies to “investigate and remedy persistent trade deficits and address unfair trade and currency policies by other nations.”
The memo is reported to specifically mention the US-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020 and is up for review in 2026.
According to The Wall Street Journal, Trump is instead considering other options, including an initial 10% tariff that rises over time.
The agencies will “now assess the impact of the USMCA on American workers and businesses and make recommendations regarding America’s participation in it,” according to the WSJ.
Trump has said he wants to recoup USD$200 billion in what he called “subsidies” to Canada in the form of trade deficits and imbalances in military spending. Trump has proposed a new External Revenue Service to collect the tariffs and address what he called currency manipulation on the part of trading partners including Canada and Vietnam.
The threat of punitive surcharges, on everything from automobiles to four million barrels per day of Alberta oil exports, had policy makers and premiers on this side of the border in a tariff induced tizzy in recent weeks.
Trump first raised the possibility in a post to his Truth Social network in November. That prompted the Bank of Canada to describe the threats a “a major new sources of uncertainty even as Canada was plunged into a leadership crisis with the resignation of Finance Minister Chrystia Freeland and the Prime Minister Justin Trudeau.
Finance Minister Dominic LeBlanc told the CBC that the Liberal government had drawn up dollar-for-dollar retaliatory duties on US products if Trump were to follow through on his trade war threats.
"It's not something that we want to do but we will do it in response, of course, if the Americans decide to do it," LeBlanc Rosemary Barton Live on Sunday.
But that would also cause significant damage to Canada’s economy. Retaliatory measures by Canada could see inflation jump, Governor Tiff Macklem suggested, potentially complicating the central bank’s path forward on rate cuts. “If there is a big change, we’re going to have to take that on board,” he said. “Hopefully that doesn’t happen.”