Canada says it can help the US achieve its ‘golden age’

Trump had initially tied the tariffs to border security, saying they will be implemented until Canada and Mexico make moves to limit the flow of fentanyl and unlawful migrants into the US.

In a bid to avoid the tariffs altogether, Ottawa had promised to implement C$1.3bn ($900m; £700m) worth of new security measures along its US border.

But this appears to not be enough, with Trump doubling down on his threats, accusing Canada on Tuesday for allowing “millions” of people to come into the US unlawfully.

Trump has also criticised Canada over its defence spending and what he says is a trade deficit between the two countries.

Experts say the deficit is due to a number of factors, including the fluctuating price of energy – one of the main commodities Canada sells to the US.

There is also reported disagreement within Trump’s orbit over when and how tariffs should be implemented.

At a call with reporters before the president’s inauguration, Canada’s energy minister Jonathan Wilkinson said there is uncertainty about Trump’s ultimate objectives.

This “uncertainty and chaos” is often used by Trump as a negotiating strategy, Mr Argitis noted.

“If he scares the hell out of us, he probably thinks that we’re going to be ready to concede things. He may or may not be right there,” he said.

Tariffs seem to be part of a larger policy position by Trump, a self-described “Tariff Man” who has also threatened levies on Chinese, European and Russian exports.

He has said he plans to create an External Revenue Service to collect “foreign trade-related revenues”, including ones generated from tariffs.

The Trump administration is also reviewing a long-standing free trade agreement between Canada, the US and Mexico ahead of its planned renegotiation in 2026. Sources have told US media that Trump wants to begin those talks sooner.

The situation – and the uncertainty around it – has left Canada with few options.

Economists have warned that Canada’s GDP could take a hit of up to 5.6% if 25% blanket US tariffs are imposed on Canadian goods, depending on how, and whether, Canada retaliates.

Given this, Mr Artigis said that Canada is focused primarily on avoiding the tariffs altogether, by pitching a stronger alliance with the US on energy and national security.

Canada is also talking about diversifying trade to reduce its heavy reliance on the US as a partner, but Mr Artigis noted the country has struggled to do so in the past, primarily due to its close geographic and cultural proximity to the US.

“There’s been no evidence that Canada is able to diversify at all, and so we’re kind of stuck with option number one, which is to avoid a trade war at all costs,” he said.

Ultimately, he added, the negotiating advantage rests with Trump.