**Canada Gears Up for Potential Trade War in Response to Trump's Tariff Threat**

Canada is already making preparations to counter President-elect Donald Trump's threat to impose substantial tariffs on Canadian products. A senior Canadian official, speaking anonymously, indicated that the government is considering retaliatory tariffs on select U.S. goods in response to potential new trade barriers.

Trump's administration plans to levy a 25% tax on all imports from Canada and Mexico if these countries do not address the flow of drugs and migrants across their borders. This potential move has spurred Canadian officials to start formulating strategies to protect their economic interests, although no definitive decisions have been made yet.

The situation echoes earlier tensions during Trump’s first term when higher tariffs on Canadian steel and aluminum led Canada to impose billions of dollars in new duties on U.S. products in 2018. The retaliatory measures then targeted politically significant industries, such as yogurt from Wisconsin, home to then-House Speaker Paul Ryan, and whiskey from Kentucky, represented by then-Republican Senate leader Mitch McConnell.

While Trump’s recent comments highlighted illegal migration and fentanyl at the U.S.-Mexico border, Canadian officials argue that including Canada in these concerns is disproportionate. For instance, the U.S. Border Patrol recorded 56,530 arrests at the Mexican border in October alone, compared to 23,721 arrests at the Canadian border over a year.

Despite the disparity, Canada sees the potential tariffs as having far-reaching economic consequences for both nations. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services are traded daily between the countries. Moreover, Canada supplies a significant portion of U.S. crude oil and electricity, with 60% of U.S. crude oil imports and 85% of electricity imports sourced from Canada.

Deputy Prime Minister Chrystia Freeland emphasized Canada’s vital role in the U.S. energy supply chain, noting that disruptions could complicate Trump’s vow to reduce American energy bills. Canadian crude accounts for two-thirds of U.S. oil imports and one-fifth of its total oil supply, highlighting the interdependence between the two economies.

In light of the potential impacts, Prime Minister Justin Trudeau is convening an emergency virtual meeting with provincial leaders to explore negotiating a trade deal with the U.S. that omits Mexico from the equation. Meanwhile, Mexican President Claudia Sheinbaum indicated that her administration is also drafting its own list of retaliatory tariffs should the need arise.

As both North American neighbors brace for possible economic conflict, Canadian officials remain hopeful that a collaborative resolution can be reached without escalating into a full-blown trade war.