Canada has begun examining possible retaliatory tariffs on certain items from the United States should President-elect Donald Trump follow through on his threat to impose sweeping tariffs on Canadian products, a senior official says.

Trump has threatened to impose tariffs on products from Canada and Mexico if the countries don’t stop what he called the flow of drugs and migrants across southern and northern borders. He said he would impose a 25 per cent tax on all products entering the US from Canada and Mexico as one of his first executive orders.

But Trump posted Wednesday evening on Truth Social that he had a “wonderful conversation” with new Mexican President Claudia Sheinbaum. 

“She has agreed to stop Migration through Mexico, and into the United States, effectively closing our Southern Border. We also talked about what can be done to stop the massive drug inflow into the United States, and also, US consumption of these drugs,” Trump posted. 

In Canada, a government official said Canada is preparing for every eventuality and has started thinking about what items to target with tariffs in retaliation. 

When Trump imposed higher tariffs during his first term in office, other countries responded with retaliatory tariffs of their own. Canada announced billions of new duties against the US in 2018 in a tit-for-tat response to new taxes on Canadian steel and aluminium.

Trump made the tariff threat on Monday while railing against an influx of illegal migrants,  though the numbers crossing from Canada pale in comparison to the southern border.

Canadian officials say lumping Canada in with Mexico is unfair but they are happy to provide more resources and work with the Trump administration to lower numbers. The Canadians are also worried about an influx of migrants if Trump follows through with his plan for mass deportations. 

Trump also railed about fentanyl from Mexico and Canada, even though seizures from the Canadian border were a fraction of those from Mexico.

Canadian officials argue their country is not the problem and that tariffs will have severe implications for both countries. 

Nearly US$2.7 billion worth of goods and services crosses the border each day. About 60 per cent of US crude oil imports and 85 per cent of US electricity imports are from Canada. Canada is also the largest foreign supplier of steel, aluminum and uranium to the US and has 34 critical minerals and metals that the Pentagon is eager to invest in for national security.

“Canada is essential to the United States’ domestic energy supply,” Deputy Prime Minister Chrystia Freeland said.

Prime Minister Justin Trudeau held an emergency virtual meeting on Wednesday with the leaders of Canada’s provinces. He stressed they need to present a united front. 

The provincial premiers want Trudeau to negotiate a bilateral trade deal with the United States that excludes Mexico.

In Mexico, President Sheinbaum, said her administration is already working up a list of possible retaliatory tariffs “if the situation comes to that.”

Her government warned that imposing tariffs would kill 400,000 US jobs and drive up prices for US consumers.

Mexican Economy Minister Marcelo Ebrard, described the Trump plan as a shot in the foot.

Meanwhile Sheinbaum described her call with Trump as “an excellent conversation.” 

“We discussed Mexico’s strategy on migration issues, and I told him the caravans are not reaching the northern (US) border, because Mexico is taking care of them,” she wrote in her social media accounts.

This post was originally published on Michael West.