Canada Readies Billions of Dollars in Retaliatory Moves to Trump Tariff Threat

The Canadian government is preparing billions of dollars in retaliatory measures on U.S. exports to Canada if President-elect Donald J. Trump makes good on a threat to impose tariffs on Canadian goods, setting up a potential showdown between two countries that are each other’s largest trading partners.

Canada is assembling a list of measures, including tariffs on U.S. exports to Canada and levies or other restrictions on key Canadian exports to the United States, if Mr. Trump imposes a sweeping 25 percent tariff on Canadian goods.

But the government made clear that it will wait to see what Mr. Trump might do before responding.

“Everything is on the table,” Prime Minister Justin Trudeau said during a news conference in Ottawa, flanked by senior members of his government and the leaders of most of Canada’s provinces and territories. Mr. Trudeau spent most of Wednesday discussing with provincial leaders how to best prepare for potential U.S. tariffs.

For now, Canada’s government is working under the assumption that Mr. Trump is serious about tariffs, which he has linked to the flow of undocumented migrants and drugs across the U.S.-Canada border.

Canada has already announced a series of steps meant to beef up the border, including more personnel and technology. The government on Wednesday said it was also deploy Blackhawk helicopters and more drones to bolster the surveillance of the shared border.

But in more recent weeks Mr. Trump’s has made statements suggesting that his motivation for possible tariffs on Canadian goods may not be solely about border security. The president-elect has repeatedly spoken about Canada becoming another U.S. state, even threatening economic force to annex the country.

Mr. Trump has argued that Canada has a trade surplus with the United States, while the United States provides important defense guarantees to Canada, to make a case that the relationship favors Canada and that the imbalance needs to be addressed.

Mr. Trump’s comments have been met with incredulity and outrage among Canadian political leaders.

Any tariffs would violate a trade agreement among the United States, Mexico and Canada, originally known as NAFTA (North American Free Trade Agreement), which was renegotiated during Mr. Trump’s first presidency. It is scheduled to be renewed next year, but the introduction of tariffs by any country would violate the agreement, potentially rendering it moot.

Mr. Trudeau, on Wednesday, said that Canada was prepared meet any aggressive economic moves by the incoming Trump administration with equal aggression.

“I support the principle of a dollar-for-dollar response,” Mr. Trudeau said. Officials said that this could lead Canada to impose tariffs on hundreds of billions of dollars’ worth of goods exported to the United States.

Canada could impose tariffs on key U.S. imports such as orange juice, officials have said, although Mr. Trudeau on Wednesday acknowledged that tariffs imposed by either government would ultimately hurt both countries and their consumers.

The debate over how to handle the potentially crippling tariffs have strained the relationship between Canada’s federal government in Ottawa, the capital, and its powerful provincial leaders.

While most premiers have united behind Mr. Trudeau and tried to project a “Team Canada” approach, some have struck a contrarian note.

Danielle Smith, the leader of the province of Alberta, which is a key source of oil for the United States, has repeatedly said she would not agree to having her province’s key resource be disrupted, even if targeting oil exports to the United States strengthens Canada’s negotiating hand.

Ms. Smith, who went to Mar-a-Lago to meet Mr. Trump on her own this week, attended Wednesday’s meeting remotely and did not sign a joint statement issued by provincial leaders and Mr. Trudeau. Instead she issued her own statement.

“Federal government officials continue to publicly and privately float the idea of cutting off energy supply to the U.S. and imposing export tariffs on Alberta energy and other products to the United States,” Ms. Smith said in a post on X. “Until these threats cease, Alberta will not be able to fully support the federal government’s plan in dealing with the threatened tariffs.”

Mr. Trudeau, members of his government and premiers from other provinces have made clear that tariffs on oil exports need to remain on the negotiating table as a possible lever to pressure the Trump administration.

About 80 percent of Canada’s oil is exported to the United States, which relies on Canada for more than half of its oil.

If Canada moves to retaliate with its own tariffs, “it has to be fair across the country,” Mr. Trudeau said.

Mr. Trudeau this month announced plans to resign by early March, when his party, the Liberals, selects a new leader who will also become prime minister. The country is expected to head to federal elections soon after, sometime in the spring, putting an essentially lame-duck leader in charge during the first phase of the new Trump administration.