Canadian politicians and business leaders react to news of Trump’s decision not to impose tariffs on his first day

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Canadian politicians, business leaders and the public in general breathed a sigh of relief Monday after U.S. President Donald Trump opted not to impose tariffs on Canada on the first day of his administration.

Trump in November threatened to impose 25-per-cent tariffs on all goods from Canada and Mexico unless they took action to end illegal migration and drug smuggling into the U.S. Canada subsequently announced $1.3-billion over six years in new border spending designed to boost scrutiny of its side of the Canada-U.S. border. On Jan. 7, the president-elect suggested that this has not satisfied him.

In his inaugural address Monday, Mr. Trump pledged to “tariff and tax foreign countries to enrich our citizens.”

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The Canadian dollar rose sharply against the U.S. dollar on Monday morning, and ended the day with five-week highs, as investors expressed relief that the country would avoid immediate U.S. trade tariffs from President Donald Trump.

Energy and industrial shares led gains on the Toronto Stock Exchange.

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By late afternoon, the loonie was trading 1.1-per-cent higher at 1.4325 per U.S. dollar, or 69.81 U.S. cents, after touching its strongest intraday level since Dec. 17 at 1.4262. Earlier on Monday, the loonie touched its weakest level since March 2020 at 1.4485.

The U.S. dollar has been notably strong since Mr. Trump’s election, as financial markets have priced in expectations of tariffs and tax cuts, which would fuel inflation and push up interest rates. Tariffs also cause a target country’s exchange rate to depreciate as demand from foreign buyers for the country’s currency decreases.

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Food producers focus on opportunity and ‘like-minded countries’

The agriculture industry welcomed reports that Mr. Trump wouldn’t impose tariffs on his first day in office but will instead direct federal agencies to evaluate trade relations with Canada, Mexico and China.

Massimo Bergamini, the executive director of Fruit and Vegetable Growers of Canada, says the review is an opportunity to “make our case” against tariffs according to more “conventional rules of engagement.”

Canadian fruit and vegetable producers shipped $4.4-billion to the U.S. in 2023, accounting for 10 per cent of total agricultural exports. Tariffs would disrupt operations, raise input costs, jeopardize competitiveness and threaten food safety, FVGC said in a press release earlier this month.

But Mr. Bergamini cautioned that companies still face uncertainty and are pausing expansion plans accordingly.

“This is good news, but it doesn’t mean we’re out of the woods,” he said.

Murat Al-Katib, founder and CEO of Regina-based AGT Food and Ingredients, called the move a “recognition that the two economies are complementary.” AGT has two facilities in the U.S. and more than 21 in Canada.

Mr. Al-Katib, whose company ships to more than 120 countries, hopes that Canada will nevertheless decrease its dependency on the U.S.

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Meanwhile, Prince Edward Island’s potato farmers were similarly breathing a sigh of relief. The small island produces an outsized number of potatoes – one-quarter of Canada’s crop. It is an export market, and the U.S. buys 50 per cent, says Greg Donald, general manager of the PEI Potato Board. That equates to 850 million pounds per year, which he says is enough potatoes to fill the Rogers Centre in downtown Toronto.

The threat of tariffs, however, still looms large and threatens to disrupt generational relationships between farmers and buyers in U.S. ports. Potatoes contribute more than $1-billion to the island’s economy annually. A disruption to trade with the U.S. “just can’t happen,” said Mr. Donald, who added that the region’s 180,000 people “won’t settle without a fight.”

Fertilizer Canada, the industry association representing producers, manufacturers, wholesalers and distributors of nitrogen, phosphate and potash said it welcomed Mr. Trump’s decision not to impose tariffs on his first day.

The U.S. has little national potash production and depends on imports, 77 per cent of which are from Canada. It has very little trade with the globe’s other major potash producers – Russia and Belarus which, when combined, match Canada’s production.

“Farmers on both sides of the border rely on North American-produced fertilizer to grow strong, healthy, high-yielding crops that feed us all,” said the statement.

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Ontario Premier Doug Ford warns ‘he’s coming for us’

Ontario Premier Doug Ford said he was not feeling relieved by U.S. media reports that Mr. Trump will not immediately impose tariffs but instead spark reviews of U.S. trade relationships with Canada, Mexico and China.

Mr. Ford told reporters at Queen’s Park he believed Mr. Trump’s tariffs were still coming and would target Canada – specifically Ontario’s manufacturing sector – likely after talks between the two countries. Mr. Trump’s comments, Mr. Ford said, have only worsened uncertainty around his province’s economy.

“It’s not a relief at all,” Mr. Ford said. “Because he’s saying, you know, he’s going to review it, and he’s going to end up doing it. You know what a relief is? ‘I’m not doing any tariffs at all.’ That’s what we need to hear. And he’s not saying it right now.”

“Make no mistake about it, he’s coming for us. Is it tomorrow? Or is it a month down the road?”

Asked about his threat to remove all U.S. products from Ontario’s liquor store shelves if the U.S. imposes tariffs, Mr. Ford said: “We’ll see what happens.”

The Ontario Premier also again would not rule out an early provincial election, saying he needs a new mandate to potentially spend tens of billions of dollars to cushion the blow of future tariffs: “These tariffs are coming. I need a mandate.”

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Alberta Premier Danielle Smith lays out six-point plan

Alberta Premier Danielle Smith, who was in Washington on Monday for the inauguration, rolled out a six-point strategy to shield Canada from the threat of tariffs.

Ms. Smith is championing an “Alberta First” strategy and has spent weeks trying to build bridges with American lawmakers and others who have Mr. Trump’s ear. The Premier’s suggestions on Monday serve as criticism of the federal government, which has long irritated Ms. Smith and her United Conservative Party.

Canada, she said, must “immediately repeal all federal anti-energy policies” and “fast track” what she called “pre-approvals” for the cancelled Northern Gateway pipeline project to the West Coast and the shelved Energy East effort to the eastern seaboard.

Pipeline proponents argue these projects would lessen Alberta’s dependence on the U.S., which is the province’s largest trading partner. Ms. Smith has argued fiercely against using Alberta’s energy as a bargaining chip in the looming trade war with Mr. Trump.

She also advocated for a “crack down on immigration streams and loopholes that are known to permit individuals hostile to Canada and the United States to enter our country, and restore immigration levels and rules to those under former prime minister Stephen Harper.”

The Premier also said Canada must “announce a major acceleration” of its NATO contribution target of 2 per cent of GDP. “This is clearly a shared priority that benefits both of our nations. There is no excuse for further delay,” Ms. Smith said.

Mr. Trump has accused Canada of being freeloader when it comes to continental defence, but he has not outright demanded the northern country meet its NATO target in exchange for him backing down from imposing a 25 per cent tariff on Canadian goods.

Ms. Smith reiterated a proposal she floated last week: that Canada narrow the deficit by purchasing more American products to minimize the U.S. trade deficit with Canada. The U.S. should try to buy more oil, timber, and agricultural products from our country in exchange for Canada shopping for more gas turbines, military equipment, and computer hardware necessary to power data centres for artificial intelligence, Ms. Smith said.

She also stressed the importance of negotiating – but without discussion of retaliatory threats.

“Focus on diplomacy and refrain from further talk of retaliatory measures including export tariffs or cutting off energy to the U.S.,” Ms. Smith said. “Having spoken with the President, as well as dozens of Governors, Senators, members of Congress and allies of the incoming administration, I am convinced that the path to a positive resolution with our U.S. allies is strong and consistent diplomacy and working in good faith towards shared priorities.

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Aluminum sector braces for uncertainty of Trump era

Even if Mr. Trump doesn’t impose punishing trade measures on the Canadian aluminum sector right away, the industry is bracing for intense volatility owing to the threat of tariffs.

“Uncertainty is something that we will have to bear for the next four years, and that’s the major thing that we have to address as a country,” Jean Simard, CEO of the Aluminium Association of Canada. “How do we live with uncertainty? How do we protect our industrial base, our economy, and potential investments in Canada?”

Currently the U.S. is highly dependent on Canadian aluminum. About 75 per cent of the roughly 5 million metric tonnes of aluminum that the U.S. consumes every year comes from Canada.

One way that Canada can protect itself from the threat of U.S. tariffs is to diversify away from that market. Half of the Canadian aluminum sent to the U.S. is a bespoke product. That makes it difficult for Canada to diversify its business elsewhere. But the other half that Canada sends to the U.S. is aluminum ingots, a basic commodity which can be easily shipped to other markets.

“You can turn around, pivot, and send it to Europe tomorrow morning,” Mr. Simard said.

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Auto sector feels prepared from last Trump administration

There is relief in the Canadian auto sector that there are no immediate new tariffs on exports to the U.S., which could have been especially devastating for domestic parts manufacturers who supply automakers on both sides of the border. And there may now be a hint of clarity about his plans to continue pursuing those tariffs going forward.

Flavio Volpe, the president of the Automotive Parts Manufacturers’ Association, said the signal being sent by Mr. Trump’s inauguration-day messaging – including the issuing of an executive order on trade – is that he intends to use Section 232 of the Trade Expansion Act, which enables the investigation of tariffs on national security grounds. That’s the same mechanism that Mr. Trump’s first administration used to explore a wide range of tariff options, and ultimately put them on steel and aluminum imports, which Mr. Volpe suggested means “they have much of the hard work done” already in terms of knowing how it could be further deployed.

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At the same time, Mr. Volpe interpreted that in his plans to revisit the United States-Mexico-Canada Agreement, Mr. Trump is looking for continental alignment on taking a tough line with China. Canada is already on board with that approach, Mr. Volpe suggested, while Mexico is moving toward it.

“We have work to do to defend our interests,” he said, “but this is a helpful framework.”

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Federal government response

“It’s good news,” Jonathan Wilkinson said in reference to Trump’s decision not to impose tariffs on the first day of his administration as the Natural Resources Minister arrived in Montebello, Que., for a two-day federal government cabinet retreat.

In recent months, Prime Minister Justin Trudeau’s government had sent numerous ministers including Mr. Wilkinson to meet with members of the incoming Trump team and argue against tariffs.

“I think everybody was concerned about the idea of tariffs,” Mr. Wilkinson said. “I think we have spent a lot of time working to try to ensure that that those in the administration and elsewhere in Washington understand that tariffs would actually hurt both countries.”

Canadian government relieved Trump held off on announcing tariffs

He said the work is not over. “There’s a lot more that we can do. So I think today was actually a step forward, and now we need to go back and continue to have conversations about how we work together more effectively.”

Finance Minister Dominic LeBlanc said on Monday that if the United States wanted to study bilateral trade ties rather than impose tariffs, that would be a positive step.

LeBlanc made his comments to reporters ahead of a cabinet retreat to discuss relations with the United States. A U.S. official earlier said Mr. Trump would issue a broad trade memo on Monday that stops short of imposing new tariffs on his first day in office.

With reports from Steven Chase, Adam Radwanski, Kate Helmore, Jeff Gray, Niall McGee, Mark Rendell and Reuters

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