Canadian foreign minister warns of 'Trump tariff tax' on Americans as threat of 25% tariff looms

TORONTO (AP) — Canada's foreign minister on Friday warned Americans they will be paying a “Trump tariff tax” if President-elect Donald Trump follows through with a threat to impose a 25% tariff on all Canadian goods.

Foreign Minister Mélanie Joly said that Canada is ready to retaliate and put maximum pressure on the United States.

“If we need to retaliate we will do so. And Americans will discover Trump's tariff tax,” Joly said after meeting with U.S. senators in Washington.

Trump has threatened to impose sweeping 25% tariffs on Canada as well as on Mexico and other trading partners, creating a sense of uncertainty about whether this is simply a negotiating ploy or a massive restructuring of U.S. foreign relations.

Trump and his team in recent days have doubled down on his promise to impose tariffs on other nations and downplayed the risk of higher inflation. “Americans are just waking up to this possibility," Joly said.

Joly said Canada will impose an initial round of retaliatory measures followed by further rounds if Trump goes ahead with it. No decision will be made until Ottawa sees the wording of Trump’s executive order.

“We are well organized and I’d even dare to say we are even better organized than the Americans,” Joly said.

By targeting America’s second largest trading partner after Mexico, Trump risks upending the markets for autos, lumber and oil — all of which could carry over quickly to consumers.

Despite Trump’s claim that the U.S. doesn’t need Canada, a quarter of the oil America consumes per day is from Canada.

The U.S. and Canadian economies are highly integrated. In the auto sector alone parts can go back and forth across the Canada-U.S. border several times before being fully assembled in Ontario or Michigan.

"These tariffs will hurt the North American auto industry and endanger American jobs as well,” outgoing Prime Minister Justin Trudeau said.

Joly met with U.S. Sens. Lindsey Graham, James Risch, Jeanne Shaheen and John Thune as well as outgoing U.S. Secretary of State Antony Blinken on Thursday.

“American senators are saying to themselves, ‘We don’t want this,’” Joly said. “When I mention the impact on Americans, they are not only surprised but they are very worried.”

Joly said Americans are not really aware of how essential Canada is with respect to foreign trade.

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.

Canada is looking at putting retaliatory tariffs on American orange juice, toilets and some steel products if Trump follows through with his threat. When Trump imposed higher tariffs during his first term in office, Canada announced billions of dollars in new duties in 2018 against the U.S. in a tit-for-tat response to new taxes on Canadian steel and aluminum.

Yogurt imports from Wisconsin and whiskey from Kentucky, the home states of top Republicans Paul Ryan and Mitch McConnell, respectively, were hit with 10% duties in 2018.

A Canadian Chamber of Commerce analysis said 25% tariffs could shrink Canada’s gross domestic product by 2.6% and America’s by 1.6%. It would also disrupt the agriculture and energy sectors, among others.

Former finance minister Chrystia Freeland, who said Friday she is running to be the next prime minister, said there must be a dollar-for-dollar tariff response and that it must be painful.

“Florida orange growers, Michigan dishwasher manufacturers and Wisconsin dairy farmers: brace yourselves. Canada is America’s largest export market — bigger than China, Japan, the U.K., and France combined. If pushed, our response will be the single largest trade blow the U.S. economy has ever endured,” Freeland wrote in the Toronto Star.