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 ones trading partners and the list of US products that could be affected is long.
Canadian officials are preparing a three-stage plan of retaliation and other trade restrictions against the United States, which will be implemented if President-elect Donald J. Trump carried out his threat to impose blanket tariffs of 25 percent on all Canadian goods imported into the United States.
Canadian officials will wait until Mr. Trump is making his move – which he has said will be on his first day in office, Monday – and then they will start with the tariffs. They will mainly affect C$37 billion ($25.6 billion) worth of consumer goods, according to two senior government officials familiar with the plans.
They spoke on condition of anonymity to discuss details of the plans, which are to remain private for now.
Objective: Maximum political pain
Canadian officials said their product selection was intended to be precisely targeted and aimed at political impact. They specifically want to focus on goods made in Republican or swing states, where the pain of tariffs, such as pressure on jobs and local business bottom lines, would affect Trump allies.
The Government of Canada hopes that these allies, including governors or members of Congress, will then pick up the phone and call Mr. Trump, intervening in favor of de-escalation.
Mélanie Joly, Canada’s foreign minister, who spent Thursday and Friday in Washington, D.C., met with a host of Republicans to support her country’s cause, including Sen. Lindsey Graham of South Carolina, Sen. Jim Risch of Idaho and Senate Majority Leader John Thune of South Dakota.
Ms Joly said she hoped her contact with senior Republicans would persuade them to intervene to prevent or limit a 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 facts, and that comes before any threat of tariffs from our side,” Ms. Jolly told The Times in an interview on Thursday. “Because then the senators might say, ‘Well, why are we doing this? Why do we charge tariffs? It affects my own constituency.”
But, he added, Canada was ready to vigorously defend its interests if necessary. “Never underestimate Canadians,” he said. “We fight very hard and we are very courageous. We’re willing to operate and make an impact on American jobs.”
Preparing for the first day in office of Mr. Trump and what it might bring to Canada Prime Minister Justin Trudeau and his cabinet will gather Monday and Tuesday in what some are calling a “US war room” to be able to respond quickly if US tariffs are announced.
The detailed list of goods is being closely guarded, but includes dozens of consumer goods from various categories such as food and beverages, as well as other types of everyday products such as dishwashers and porcelain items such as bathtubs and toilets.
Depending on which Canadian products Mr. Trump to impose tariffs and the level of those tariffs, Canada’s second move would be to extend its own tariffs to more American products, affecting $150 billion worth of Canadian imports from the United States.
As part of its strategy, the Canadian government is also considering other measures that would limit exports of Canadian goods to the United States, such as export quotas or tariffs that the American side must bear. This type of measure would be reserved for particularly sensitive Canadian exports that the United States relies on, such as hydroelectric power from Quebec that is used to power all of New England.
Tariffs work more like a tax on goods and are usually passed on to consumers. They make imported goods more expensive and this often means that consumers stop buying them, ultimately hurting the foreign companies that export them.
Trade restrictions such as export quotas aim to limit the availability of an exported good and are particularly effective when an importing country does not have readily accessible or sufficient alternative sources for that good.
Behind the rim
Regardless of how the counter-tariffs or restrictions on Canadian exports are implemented, the goal will be the same: to pressure the Trump administration to back down from the president-elect’s vow to launch a devastating trade war on the United States’ neighbor.
The trade relationship between the two countries is huge, with nearly $1 trillion in goods exchanged each year. Canada fluctuates with Mexico as the United States’ largest trading partner depending on the price of oil.
Some cross-border industries are so consolidated that tariffs would suddenly create a significant regulatory headache for many companies. A single vehicle, for example, crosses the US-Canada border up to eight times before it is fully assembled. The tariffs will immediately disrupt auto assembly lines in the United States and Ontario, the heart of Canada’s auto industry.
And Canada exports vital goods to the United States. About 80 percent of Canada’s oil and 60 percent of its natural gas is exported to the United States. More than half of the oil imported into the United States comes from Canada.
A third and final level of escalation should a US-Canada trade war escalate, which the Canadian government wants to avoid, would curb exports of hundreds of billions of dollars worth of sensitive commodities, including oil and gas, potash, uranium and critical minerals. All are exports that are critical to the United States
Alberta, Canada’s oil powerhouse, has said it does not support measures that would affect its core industry. The rift between the province’s leadership and the rest of the country could become more consequential if Canada decides that oil should be used as leverage against the United States.
Canada’s planning for a potentially protracted U.S. trade war also includes supporting domestic industries, according to one of the senior officials.
The government is preparing for the possibility of financial rescue programs for Canadian businesses hit hard by the U.S. tariffs, likely on a case-by-case basis, the official said.
While there may not be massive bailouts or blanket funding for entire industries, the official said it would be unthinkable to allow a tariff war with the United States to wipe out thousands of jobs and businesses without the government stepping in to cushion the blow.
