Florida orange juice. Whiskey from Tennessee. Kentucky peanut butter.
Canada is preparing for an all-out trade war with its closest ally and one of its top allies Trading partners, the list of US goods that could be affected is long.
Canadian officials are preparing a three-phase plan for retaliatory tariffs and other trade restrictions against the United States, which will be put into effect if President-elect Donald J. Trump follows through on his threat to impose a sweeping 25 percent tariff on all Canadian goods. Goods imported into the United States.
Canadian officials will wait until Trump makes his move — which he said would be on his first day in office, Monday — and then begin imposing the tariffs. It will mostly affect consumer goods worth C$37 billion ($25.6 billion), according to two senior government officials familiar with the plans.
They spoke on condition of anonymity to discuss details of the plans, which are meant to remain private for now.
The goal: maximum political pain
Canadian officials said their selection of goods was meant to be carefully targeted and aimed at political influence. They specifically want to focus on goods made in Republican or swing states, where the pain of tariffs, such as squeezing jobs and the bottom lines of local businesses, will hurt Trump’s allies.
The Canadian government hopes that these allies, including state governors or members of Congress, will pick up the phone and call Mr. Trump to intervene in favor of stopping the escalation.
Mélanie Jolie, Canada’s foreign minister, who spent Thursday and Friday in Washington, met with a large number of Republicans to make her country’s case, including Senator Lindsey Graham of South Carolina, Senator Jim Risch of Idaho, and Senate Majority Leader John Thune of North Carolina. South Dakota.
Ms. Jolly said she hoped her outreach to senior Republicans would persuade them to intervene to avoid or limit the trade war and its negative impact on consumers and jobs on both sides of the border.
“My job here is to be able to talk about the facts, and that comes before any threat of counter-tariffs on our part,” Jolie said in an interview with The Times on Thursday. “Because senators might say, ‘Well, why are we doing this? Why do we impose tariffs? “It affects my constituency.”
But she added that Canada is prepared to vigorously defend its interests if necessary. “Never underestimate Canadians,” she said. “We are fighting hard, and we are very brave. We are willing to take action and make an impact on American jobs.”
In preparation for Trump’s first day in office and what it could hold for Canada, Prime Minister Justin Trudeau and his cabinet will huddle together Monday and Tuesday in what some are calling America’s “war room,” so they can respond quickly if U.S. tariffs are announced.
The detailed list of goods is coherent, but includes dozens of consumer goods from various categories, such as foods and beverages, as well as other types of everyday products, including dishwashers and ceramic goods such as bathtubs and toilets.
Depending on which Canadian goods Trump chooses to impose tariffs on, and the level of those tariffs, Canada’s second step would be to expand its tariffs to include more American products, affecting C$150 billion worth of imports from the United States.
As part of its strategy, the Canadian government is also considering other measures that would restrict the export of Canadian goods to the United States, such as export quotas or duties borne by the US side. This type of measure would be reserved for particularly sensitive Canadian exports that the United States relies on, such as hydroelectric power from Quebec used to provide power across New England.
Tariffs work more like a tax on goods and are usually passed on to consumers. They make imported goods more expensive, which often means that consumers stop buying them, which ultimately hurts the foreign companies exporting them.
Trade restrictions such as export quotas aim to limit the availability of an exported good, and are particularly effective when the importing country does not have accessible or sufficient alternative sources of that good.
Back from the brink
No matter how Canada’s counter-tariffs or export restrictions are deployed, the goal will be the same: to pressure the Trump administration to back away from the president-elect’s pledge to launch a devastating trade war against the United States’ neighbour.
Trade relations between the two countries are enormous, with nearly $1 trillion worth of goods exchanged every year. Canada fluctuates with Mexico as the United States’ largest trading partner depending on the price of oil.
Some cross-border industries are so integrated that tariffs may suddenly pose a major regulatory headache for many companies. For example, a single vehicle crosses the US-Canadian border up to eight times before it is fully assembled. Tariffs would immediately cripple auto assembly lines across the United States and in Ontario, the heart of Canada’s auto industry.
Canada exports vital goods To the United States. About 80 percent of Canadian oil and 60 percent of natural gas are exported to the United States. More than half of the oil imported into the United States comes from Canada.
The third and final level of escalation, if the trade war between the United States and Canada escalates, which the Canadian government is keen to avoid, would restrict the export of sensitive commodities worth hundreds of billions of dollars, including oil, gas, potash, uranium and vital minerals. Metals. All of them are exports of great importance to the United States
Alberta, Canada’s oil export hub, said it does not support measures that would affect its key industry. The rift between the province’s leadership and the rest of the country could become more significant if Canada decides that oil should be used as leverage against the United States.
Canada’s plans for a potential long-term US trade war also include supporting domestic industries, according to a senior official.
The government is preparing for the possibility of providing financial bailouts to Canadian companies hit hard by U.S. tariffs, likely on a case-by-case basis, the official said.
While mass bailouts or blanket funding for entire industries may not be on the table, the official said it would be unreasonable to let the tariff war with the United States wipe out thousands of jobs and businesses without the government stepping in to soften the blow.