Trump Pulls Back on Canada Threat After Saying Pain Would Be Worth It

Canada had already tried to convince Trump that its 1.3 billion Canadian dollars' worth of investment in border security showed it is working as hard as it can to stop fentanyl and illegal migration, but, in their second conversation Feb. 3, Prime Minster Justin Trudeau used the same tack Mexico did to win a reprieve, saying: "Nearly 10,000 frontline personnel are and will be working on protecting the border."

Trump acted as if this was a new offer in his announcement of a pause. "I am very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured. FAIRNESS FOR ALL!"

Trump's announcement on Feb. 1 that he was going to impose 25% tariffs on Canadian exports -- reduced to 10% on energy exports -- and 25% on all Mexican exports sent companies that rely on imports and exports to the two countries into a panic, including fuel refiners, agricultural exporters, the auto industry, steel and auto unions, the aluminum industry and more.

However, the United Steelworkers didn't criticize the prospect of tariffs on Mexico or China. The steelworkers, who represent Canadian workers as well, wrote: "Approximately $1.3 trillion worth of goods cross the Canada-U.S. border annually, supporting 1.4 million American jobs and 2.3 million Canadian jobs. These tariffs don’t just hurt Canada. They threaten the stability of industries on both sides of the border."

The Aluminum Association said: "The U.S. industry sources around 2/3 of the primary aluminum it uses every year from Canada, since all U.S.-based smelters, even running at full capacity, cannot produce nearly enough metal to meet demand."

United Autoworkers said Trump should "immediately seek to renegotiate our broken trade deals," and said aggressive tariff action to prevent jobs from moving to Mexico or China is warranted, but "we do not support using factory workers as pawns in a fight over immigration or drug policy."

The Distilled Spirits Council issued a joint statement with Mexico's tequila trade group and Canada Spirits that said the tariffs would hurt all three countries, with retaliation directed at U.S. exports. The Council CEO also decried the fact that some Canadian provinces removed U.S.-made spirits from government-run liquor stores, calling it "counterproductive." Kentucky Gov. Andy Beshear urged Kentucky's delegation to Congress to stop the "preventable catastrophe" heading for bourbon exporters in the state.

Although the tariffs under the International Emergency Economic Powers Act were based on the countries' lack of action to stop fentanyl smuggling and illegal immigration, Trump often talked about trade deficits and non-tariff barriers as reasons for punishing Canada and Mexico.

When a reporter asked in the early afternoon if Trudeau could change Trump's mind, Trump said, "Look, what I'd like to see [is] Canada become our 51st state." He complained about the trade deficit in goods, and said, "We don't need them to build our cars. I'd rather see Detroit or South Carolina or Tennessee, any one of our states, to build our cars." He complained that Canada assembles 19% of North American cars.

He said some people think absorbing Canada "would be a long shot," but he said it would be 100% certain to happen if Americans "wanted to play the game right. But a lot of people don't like to play the game, because they don't have a threshold of pain. And there would be some pain, but not a lot. The pain would really be theirs."

Just after he spoke with Trudeau in the morning, he posted on social media: "Canada doesn’t even allow U.S. Banks to open or do business there. What’s that all about?" To reporters in the Oval Office in the afternoon, he again brought up banking rules and complained, "They don't take our agricultural products for the most part. They make cars, they basically don't take our cars."

In fact, Canada imported $25 billion worth of cars and light trucks from the U.S. in 2023, and is far and away its biggest export market. Looking at both cars and car parts, according to Canadian statistics, Canada exported almost $91 billion Canadian dollars' worth to the U.S. while it imported $142 billion Canadian worth from the U.S.

According to Canadian statistics, the U.S. exported almost $29 billion Canadian worth of agricultural and food products to Canada, but imported twice as much from Canada.

Democrats criticized the planned tariffs as raising the price of food, gasoline, cars and appliances, and said they'd also lead to job losses because of the damage to businesses.

Rep. Gregory Meeks of New York, the top Democrat on the House Foreign Affairs Committee, said he'd be introducing resolutions to revoke the emergencies that give the legal basis for the tariffs. "Instead of working with Congress to lower costs for Americans, President Trump is abusing the International Emergency Economic Powers Act (IEEPA) to circumvent Congress. In order to protect America’s interests, and consistent with Congressional authority under the National Emergency Act, I will shortly be introducing privileged Resolutions to protect middle class consumers and terminate the ‘emergencies’ issued by President Trump," he said. Given the Republican majorities in both chambers, no one expects a veto-proof majority to support those resolutions.

Meeks' spokesman didn't immediately respond on whether Meeks would be introducing resolutions now that the tariffs are on pause.

However, Trump warned that the monthlong pause for Mexico is not a total backing away from the threat. He said: "We haven't agreed on tariffs yet. Maybe we will, maybe we won't." He said Secretary of State Marco Rubio, Treasury Secretary Scott Bessent and soon-to-be-confirmed Commerce Secretary Howard Lutnick would lead the negotiations, but he also would be involved.

Rubio said during his travels in El Salvador on Feb. 3 that the promise to move 10,000 soldiers to the border was heartening, adding: "I’m not sure it resolves all the issues that were raised, because beyond that there are some trade imbalance issues the President wants to address."

Trump was criticized by The Wall Street Journal editorial board for sparking what it dubbed the "dumbest trade war in history," given that Mexico and Canada are integrated into U.S. manufacturing after decades of a free trade agreement. Trump posted on social media: "Anybody that’s against Tariffs, including the Fake News Wall Street Journal, and Hedge Funds, is only against them because these people or entities are controlled by China, or other foreign or domestic companies. Anybody that loves and believes in the United States of America is in favor of Tariffs. They should have never ended, in favor of the Income Tax System, in 1913. The response to Tariffs has been FANTASTIC!"

In an earlier anti-WSJ post, he wrote: "WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID. WE ARE A COUNTRY THAT IS NOW BEING RUN WITH COMMON SENSE — AND THE RESULTS WILL BE SPECTACULAR!!!"

He also shared many tweets by Republican supporters, including the House Ways and Means Committee chairman (Rep. Jason Smith, R-Mo.), who said Trump was taking "bold action to protect our communities, secure our borders, and bring additional revenues to the federal government." He shared House Speaker Mike Johnson, R-La., tweeting "This is long overdue."

Trump also claimed that without exports to the U.S., "Canada ceases to exist as a viable Country. Harsh but true!"

Canada issued a list of goods from the U.S. that it planned to place 25% tariffs on if the U.S. imposed its tariffs, including firearms, wine, spirits, beer, citrus fruit, orange juice, tires, toilet paper, cardboard boxes, stoves, refrigerators, dishwashers, washers, dryers, furniture and motorcycles. The goods targeted were worth $30 billion Canadian last year.

Although both the U.S. tariffs on Mexico and Canada and the Canadian retaliation were avoided, even the threats caused disruption, as businesses rushed to get goods into the country ahead of the tariffs, and spent time planning how to manage inventories in case they arrived.

Given that both countries still face the threat, this isn't a full resolution.

Autos Drive America CEO Jennifer Safavian wrote ahead of the pauses, "The North American auto industry is highly integrated and the imposition of tariffs will be detrimental to American jobs, investment, and consumers. These tariffs undermine the USMCA, a landmark trade agreement negotiated by President Trump that led to unprecedented growth and prosperity for the United States. We urge all parties to reach a swift resolution in order to provide clarity and stability for the entire U.S. auto industry."

That lack of clarity is almost worse than the tariffs and tariff threat, attorney Michael Roll said during a webinar Feb. 3. "Probably the biggest question is, how long are these things going to be around? I don't pretend to know, nobody knows. We can see where the Mexican tariffs were suspended. I think the big takeaway to me, just having dealt with business for 30 years and advising and counseling people and companies on tariffs, people need certainty in order to make decisions. Whatever the rule is, whether they like the rule or don't like the rule, if they know what the rule is, then they can make decisions around that."