Donald Trump has warned Canada that if it signs special trade deals with China, the U.S. could respond with 100% tariffs on Canadian exports.
This is not just political noise. It’s an economic pressure move.
Here’s what’s really going on 👇
🇨🇦 Canada’s Vulnerability
Canada sends 75–76% of all its exports to the U.S.
That’s over $450 billion per year.
A 100% tariff would instantly make most Canadian goods uncompetitive in the U.S. market.
Sectors at risk: • Autos & auto parts
• Energy exports
• Aluminum & steel
• Manufacturing
Trade with the U.S. equals roughly two-thirds of Canada’s GDP when you include indirect exposure.
This makes Canada extremely sensitive to U.S. trade retaliation.
🇺🇸 Trump’s Core Fear: Trade Routing
The real concern isn’t Canada itself.
It’s China using Canada as a back door into the U.S.
If Canada signs favorable trade deals with China, Chinese companies could: • Ship goods into Canada
• Relabel or lightly process them
• Re-export them into the U.S.
• Avoid U.S. tariffs on Chinese goods
Trump calls this using Canada as a “drop-off port.”
And from Washington’s perspective, it would break U.S. trade policy against China.
📉 We’ve Already Seen the Damage From Much Smaller Tariffs
In 2018–2019: • U.S. imposed 25% tariffs on Canadian steel
• 10% tariffs on Canadian aluminum
Result: • Canadian steel exports to the U.S. fell 41%
• Aluminum exports fell 19%
• ~$16.6B CAD of trade was disrupted
• Production cuts, job losses, higher costs, slower supply chains
And that was with just 10–25% tariffs.
Now imagine 100% tariffs.
🇨🇳 Why Canada Still Wants China
Canada is trying to diversify away from over-dependence on the U.S.
China: • Buys major volumes of Canadian canola & seafood
• Is key to EV & battery supply chains
• Offers long-term growth demand
From Canada’s perspective: ➡️ This makes economic sense.
From the U.S. perspective: ➡️ This looks like a strategic threat.
⚠️ Bottom Line
Canada is stuck in the middle of the U.S.–China trade war.
If it leans toward China: • It risks massive U.S. tariffs
• Severe economic shock
• Market instability
If it stays tied only to the U.S.: • It remains dangerously dependent on a single trading partner
This isn’t just politics anymore.
It’s a macro-level trade conflict that could hit: • North American supply chains
• Equity markets
• FX markets
• Commodities
• Global risk sentiment
