Trump likely to impose tariff on Canada on February 1

Trump has been threatening to impose sweeping tariffs on Canada, Mexico and other trading partners

Toronto: Canadian leaders expressed relief on Monday that broad tariffs were not applied to Canadian products on the first day of Donald Trump’s presidency, but Trump later said he could impose a 25 per cent tariff on Canada and Mexico on February 1.

Trump has been threatening to impose sweeping tariffs on Canada, Mexico and other trading partners. An incoming White House official who insisted on anonymity pointed reporters on Monday morning to a Wall Street Journal story saying Trump will only sign a memorandum telling federal agencies to study trade issues.

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Still, Trump pledged in his inaugural address that tariffs would be coming and said foreign countries would be paying the trade penalties, even though those taxes are currently paid by domestic importers and often passed along to consumers.

“We’re thinking in terms of 25 per cent on Mexico and Canada,” Trump said on Monday night in the Oval Office. “I think February 1st.”

Finance Minister Dominic LeBlanc earlier said reprieve is too strong of a word but said he felt good. “If they decide to take a close look at the US Canadian relationship when it comes to trade that’s a very good thing,” LeBlanc said at a Cabinet retreat in Montebello, Quebec.

“Both countries are stronger and more secure when we respect and honour the comprehensive free trade agreement.” Trump said he would establish an external revenue service to collect all tariffs, duties and revenues and that it would lead to “massive amounts of money pouring into our country coming from foreign sources.”

Foreign Minister Mélanie Joly said they are “very cautious” but they know they can make sure it is a win-win relationship.

Danielle Smith, the premier of Canada’s oil-rich province of Alberta, said she was “pleased to see that President Donald Trump has decided to refrain from imposing tariffs on Canadian goods at this time as they study the issue further.” “We appreciate the implied acknowledgement that this is a complex and delicate issue with serious implications for American and Canadian workers,” Smith said in a post on X.

Smith said avoiding tariffs will save hundreds of thousands of Canadian and American jobs across every sector. “Despite the promising news today, the threat of US tariffs is still very real,” she posted.

Canada is one of the most trade-dependent countries in the world, and 75 per cent of Canada’s exports, which include automobiles and parts, go to the US. Canada is the top export destination for 36 US states. Nearly 3.6 billion Canadian dollars (USD 2.7 billion) worth of goods and services cross the border each day. Despite Trump’s claim that the US doesn’t need Canada, a quarter of the oil America consumes per day is from there.