The specter of sweeping tariffs on Canadian imports looms large as former U.S. President Donald Trump, now returned to the White House, sharpens his focus on America’s northern neighbor. Since his return to office in January, Trump has made Canada a near-constant target of his tariff rhetoric, placing the country at the forefront of his trade agenda and overshadowing his more traditional antagonism toward Mexico, China, and the European Union.

On his first day back in office, Trump labeled Canada as a “very bad abuser,” a sentiment he repeated on subsequent days, signaling that his threats are more than just political posturing. Plans to impose 25% blanket tariffs on Canadian and Mexican imports could materialize as early as February 1. The policy, if enacted, would drastically reshape North American trade dynamics, with Canada — a historically close ally — likely bearing the brunt of the economic fallout.

Trump’s fixation on Canada raises questions about his motivations, the economic ramifications of such an escalation, and the broader political implications for U.S.-Canada relations.

Canada at the Epicenter of Tariff Talk

Canada, despite being America’s largest trading partner and closest ally, has found itself in the crosshairs of Trump’s trade policy. Experts suggest that the focus on Canada is partially tied to the impending review of the U.S.-Mexico-Canada Agreement (USMCA) in 2026, the trade pact that replaced the North American Free Trade Agreement (NAFTA) during Trump’s first term. The deal, which governs critical industries such as lumber and dairy, is a linchpin of North American economic cooperation.

Henrietta Treyz, director of economic policy research at Veda Partners, highlighted the potential influence of USMCA in Trump’s renewed trade war with Canada. Speaking on Yahoo Finance’s Capitol Gains, Treyz noted that the tariff threats could be a prelude to renegotiating terms more favorable to the U.S. “It’s really about the USMCA renewal that’s due in about 18 months,” she said, alluding to the possibility of an earlier review. The Trump administration has already initiated a public consultation process on the trade pact, signaling its intent to make changes.

Despite these undercurrents, Trump has publicly dismissed USMCA as a factor in his tariff threats. Instead, his rhetoric has zeroed in on issues like illegal immigration and fentanyl trafficking, which he claims originate in Canada. However, these assertions are widely disputed by experts and data, raising concerns about the legitimacy of his stated rationale.

The Immigration and Drug Myths

Trump’s allegations against Canada have centered on two key issues: illegal immigration and fentanyl smuggling. Yet, the evidence supporting these claims is notably scant.

Data from U.S. Customs and Border Protection (CBP) paints a clear picture. In the 2024 fiscal year, the agency reported around 23,700 apprehensions at the northern border, a figure dwarfed by the 1.5 million apprehensions at the U.S.-Mexico border. While illegal crossings from Canada have increased in recent years, they remain a small fraction of overall border activity.

On the issue of fentanyl, Trump’s claims are similarly shaky. The U.S. Drug Enforcement Administration (DEA) has repeatedly emphasized that Mexico, not Canada, is the primary source of fentanyl entering the United States. The DEA’s 2024 National Drug Threat Assessment identified Mexican cartels and China as the main drivers of the fentanyl crisis. Canada was not mentioned once in the 57-page report.

A separate 2020 DEA analysis noted that while some fentanyl enters Canada, it is primarily for domestic use, with only small amounts being smuggled into the U.S. These findings stand in stark contrast to Trump’s recent statements, such as, “The fentanyl coming through Canada is massive,” which remain unsubstantiated.

Political Undertones in the Tariff Threats

Beyond trade and immigration, Trump’s antipathy toward Canada is intertwined with his contentious relationship with Prime Minister Justin Trudeau. The two leaders have clashed repeatedly, with Trudeau emerging as a frequent foil during Trump’s first term. As Trudeau prepares to leave office, speculation has grown that Trump’s latest moves may be aimed at influencing Canada’s political landscape, particularly in the lead-up to a potential snap election this spring.

According to a recent analysis by Signum Global, Trump’s hostility toward Canada has surpassed his long-standing animosity toward Mexico. “Part of that distaste is driven specifically by a repulsion vis-à-vis Canada’s Liberal Party and its representatives,” the note stated. The analysis suggested that Trump’s rhetoric could be a strategic effort to sway Canadian politics, potentially paving the way for a more conservative government more aligned with his policies.

Economic Fallout for Both Sides

The economic stakes of Trump’s tariff threats are immense. Canada is the largest importer of American goods, purchasing approximately $365 billion in U.S. exports annually. These include everything from oil and gas to manufactured goods and agricultural products. A trade war between the two nations would undoubtedly inflict significant economic pain on both sides.

A report by Oxford Economics estimates that a 25% blanket tariff on Canadian imports could trigger a 3% contraction in Canada’s GDP, plunging the country into a recession. The effects would ripple across key industries, including lumber, dairy, and manufacturing, which are deeply integrated with the U.S. economy.

Canada has already signaled its readiness to retaliate. The government in Ottawa has floated potential tariffs on American products such as orange juice, toilets, and certain steel products. While such measures would be a fraction of the economic impact of U.S. tariffs, they could still disrupt supply chains and consumer markets.

For the U.S., the consequences would be felt by industries reliant on Canadian imports, such as construction and manufacturing. Consumers could also face higher prices for everyday goods as supply chain disruptions ripple through the economy.

The Future of U.S.-Canada Relations

The escalating tension between the U.S. and Canada marks a low point in what has historically been one of the world’s strongest alliances. The two nations share a 5,500-mile border, deep cultural ties, and a long history of economic cooperation. Trump’s combative stance risks undermining this relationship, with long-term consequences for both countries.

Despite the political rhetoric, many experts believe that cooler heads will ultimately prevail. Trade disputes between the U.S. and Canada have flared up in the past, only to be resolved through negotiation and compromise. However, Trump’s unpredictability adds an element of uncertainty that has left policymakers on both sides of the border scrambling.

As the February 1 deadline approaches, all eyes will be on the White House to see whether Trump follows through on his threats or opts for a more measured approach. For Canada, the stakes couldn’t be higher. A trade war with its largest trading partner would be a severe blow to its economy, potentially reshaping its political and economic landscape for years to come.

For now, Canada can only wait and prepare for the fallout. In the words of one Canadian official, “We’ve weathered storms before. But this one feels different.”