Canadian government ready to reveal initial retaliation plan Monday if Trump starts ‘trade war’

As Donald Trump is expected to impose tariffs on Canadian goods next week, the federal government says they are prepared to hit back. Rache Aiello reports.

The Canadian government is ready to respond with proposed retaliatory tariffs on an initial round of American goods on Monday if U.S. president-elect Donald Trump moves to immediately levy tariffs on inauguration day.

Sources confirmed to CTV News late Thursday that the federal government is poised to push back promptly, if provoked, and on Friday, a senior government source with close knowledge of the file said the retaliation would involve slapping tariffs that would inflict equal economic damage to what the U.S. imposes.

According to the source, the retaliation would also happen in three rounds. The first phase would require no consultation and immediately slap tariffs on a list of items, including Florida orange juice and Kentucky bourbon. The prime minister would also explicitly tell Canadians not to purchase those items.

The second round would happen after a two-week consultation and cover $37 billion of U.S. goods. Then, depending on how significant the initial U.S. tariffs on Canada are, the federal government may also announce consultations on tariffs covering another $110 billion or so of American imports.

Foreign Affairs Minister Melanie Joly spoke about Canada’s preparations on Friday.

“This would be basically starting a trade war. The Americans would be starting a trade war against us, and this would be the biggest trade war between Canada and U.S. in decades,” Joly said in a call with reporters from Washington, D.C.

Trump has threatened to impose a 25 per cent tariff on all Canadian imports on day one of his administration, “as one of many first executive orders,” she added.

Prime Minister Justin Trudeau met with all of Canada’s provincial and territorial leaders on Wednesday to discuss Canada’s response plan to the anticipated trade action.

They emerged from the hours-long meeting largely, but not unanimously, united around the plan to leave all options on the table, including targeting a list of U.S. goods with retaliatory counter-tariffs, cutting off key energy exports and considering ways to distribute revenues from any Canadian retaliation to impacted sectors.

Asked to confirm an estimate floated by Liberal leadership contestant and former finance minister Chrystia Freeland – that a Canadian dollar-for-dollar counter tariff could bring in $150 billion in revenue – or what the impact on Canada’s GDP would be, Joly wouldn’t say.

“We know that there would be lots of job loss across the country, and we know that this would also have an impact on cost of living for Canadians. I won’t go into the details of what that figure is like, but definitely, we have numbers that are highlighting how much this could be devastating,” she said.

Joly was speaking to reporters at the tail end of her two-day trip south of the border, where she met with a series of American officials, including Senate Majority Leader John Thune, Republican Sen. Lindsey Graham and U.S. Secretary of State Antony Blinken.

“We are implementing our plan, which is three-fold,” Joly said, explaining that the first phase is working to prevent tariffs, the second step is preparing Canada’s response to tariffs, and the third being plans to diversify Canada’s export market and ensuring there are no trade barriers across the country.

“A lot of senators are very surprised by the numbers we’re giving them. A lot of senators have never heard about this Trump tariff tax,” Joly said.

She said she thinks these officials are now better understanding how these tariffs would impact their own constituencies, and how they would work against their promises — and president-elect Trump’s campaign pledge — to make life more affordable for Americans and to improve the U.S. economy.

“So that’s why I think that we need to continue to press people on the Hill in Washington, and across the U.S., including key governors and state representatives,” Joly said.

Despite Trump threatening tariffs, unless more is done to halt the flow of illegal drugs and migrants over the Canada-U.S. border, federal officials say they have received no assurances that their $1.3-billion border security plan will be enough to avoid the imposition of massive tariffs.

“If indeed the incoming administration moves forward with these unfair and unjust tariffs, Canada will respond,” Trudeau said Thursday, a sentiment echoed by his trade and foreign affairs ministers in respective same-day U.S. media interviews.

Conservative Leader Pierre Poilievre would not say Thursday whether he’d support energy export tariffs, something Alberta Premier Danielle Smith stood solely against after the First Ministers’ meeting, amid other premiers calling for a unified “Team Canada” response.

On Friday, Trudeau met with his newly struck Canada-U.S. relations council of prominent Canadians tasked with leveraging their respective business, innovation and policy expertise to advise the prime minister and his government “at this important time in the Canada-U.S. relationship.”

“This is the latest piece of our ‘Team Canada’ approach to make sure we have all hands on deck as we approach the challenge of the incoming administration,” Trudeau said, adding that “if the worst-case scenario comes to pass,” the government will lean on the panel of 18 to help it make its case to American contacts that the decision to impose tariffs on Canada “will hurt Americans first and foremost.”

“If push comes to shove, we will be strong and unequivocal in our defence of Canada,” he said.

Trudeau has also scheduled a cabinet retreat for next Monday and Tuesday, expected to be largely focused on “defending Canadian interests and strengthening Canada- U.S. relations,” and has vowed to meet with the premiers weekly following Trump’s inauguration.

With files from CTV News’ Vassy Kapelos, Mike Le Couteur and Stephanie Ha