Trade and migrants: Why Trump threatening Canada and what’s at stake
Donald Trump and Justin Trudeau (photo: Getty Images)
US President-elect Donald Trump plans to impose tough trade tariffs on Canada.
Read how this could affect Ukraine's ally and what Canada's response will be in RBC-Ukraine's article.
Contents
With the return of Donald Trump to power, the United States risks damaging relations with one of its closest allies and its neighbor Canada, which is also one of Ukraine's important partners. On the first day of his presidency, Trump plans to impose 25% tariffs on all Canadian goods, which will hit the country's economy, he said on Truth Social.
Trump's criticisms of Canada
Trump has two main complaints against Canada: border security and an imbalance in trade.
The United States has a land border with only two countries. To the south with Mexico and the north with Canada. According to Trump, illegal immigrants and drugs are entering the United States through the Canadian border. In particular, fentanyl. This is a synthetic opioid that is used to make drugs that are much more powerful than heroin. It has become a real killer in the United States. Every year, up to 70 thousand people die from it in the country.
From October 2023 to September 2024, the US Customs and Border Protection (CBP) registered just under 199,000 encounters of illegal immigrants at the border with Canada. These are people who were detained for illegal entry into the United States and those who did not have the right to enter but tried to enter the country. During the same time, US authorities seized about 5,245 kg of drugs, mostly marijuana. This is less than the 25,000 kg seized during the same period a year earlier.
At the same time, it is an order of magnitude less than what is infiltrating the United States through the border with Mexico. CBP recorded more than 2.13 million encounters at the US-Mexico border during the same period.
Canada is one of the largest trading partners of the United States. Both countries, as well as Mexico, are part of the USMCA free trade zone - the name comes from the first letters of the countries.
Thanks to the zone, about 60% of oil imported to the United States comes through pipelines from Canada. Thanks to shale oil production, the United States is once again the world's largest oil producer. However, many US refineries are designed to process heavy crude oil from Canada, not light American crude. Therefore, the US exports most of this product and continues to import oil from Canada. Also, some American companies have set up production facilities in Canada. As a result, in 2023, the trade deficit with Canada amounted to $119 billion.
Trump plans to reduce the trade deficit with Canada in the same way as with other countries - through tariffs. In addition, tariffs should become a means of pressure on the border.
Trudeau and Trump's difficult conversation
On November 30, Canadian Prime Minister Justin Trudeau paid a private visit to Trump's residence in Mar-a-Lago, Florida.
As Trudeau noted after the meeting, the conversation with Trump focused on trade and border security. Official reports described it as good. The Canadian Prime Minister told the US president-elect that the number of migrants illegally crossing the Canadian border is negligible compared to those coming from Mexico.
But according to Fox News, Trump was very direct when it came to complaints against Canada. In response to the threats to impose trade tariffs, Trudeau said that this step would completely kill the Canadian economy, the outlet reported, citing two sources present during the conversation between the two leaders.
In response, Trump allegedly asked: “So your country can’t survive unless it’s ripping off the US to the tune of $100 billion?” Trump then suggested that Trudeau make Canada the 51st state of the United States and sarcastically added that Trudeau could become its governor. In general, Trump made it clear that he expects changes from the Canadian government before his inauguration on January 20 next year.
Canada's possible response
In response to Trump's accusations against illegal immigrants, the Canadian government will tighten border controls. Public Safety Minister Dominic LeBlanc said that his government may make additional investments at the border, without providing specific details. Stricter restrictions will be introduced to prevent migrants from traveling through Canada to the United States without proper authorization.
“We’ll continue to tighten the screws on that process to make sure that we continue to have an immigration system and borders that in fact support the integrity and security that Canadians and Americans work on every day,” LeBlanc said.
The answer to the possible introduction of tariffs is not so obvious. According to Radio Canada, the government is considering imposing tariffs on American goods.
A tariff war could be more damaging to Canada than to the United States. Nevertheless, there are areas in which tariffs would be politically painful for Washington. In particular, Canada could threaten to impose tariffs on US agriculture, such as dairy products and grain. This will hit farmers in the central states who have consistently supported Trump.
Restrictions are also being considered against companies whose owners are currently close to Trump. One of the options is Tesla, as its founder Elon Musk is now part of the US president-elect's inner circle.
Read also why Trump is planning trade wars with China and the European Union and how it could affect Ukraine.
Sources: US migration statistics, Donald Trump's statements, and publications by Fox News, Bloomberg, and Radio Canada.
