5 things to know if Canada hits back against Trump tariffs

United States President Donald Trump has threatened to impose a punishing 25 per cent tariff on everything imported to the U.S. from Canada. In return, the Canadian government says it would impose retaliatory tariffs of its own on U.S. goods entering Canada.

"Our job is to make sure we're ready for every scenario," Finance Minister Dominic Leblanc told CBC News on Monday when it appeared Canada would be spared tariffs in the short-term.

Trump said Monday night that those tariffs could be coming Feb. 1. Here's what would happen if Canada takes a retaliatory route.

Canada has a complicated system of tariffs — essentially a tax on imports from around the world. There are so many different tariffs for different goods from different countries that the manual that the Canada Border Services Agency (CBSA) uses to calculate tariffs is more than 1,400 pages.

Under Section 53 the Customs Tariff act, cabinet is empowered to adopt an order in council to impose tariffs or change tariff rates. Generally, a change is proposed by the finance and foreign affairs ministers and is subject to approval by the Treasury Board cabinet committee. This law means Parliament does not have to approve each new tariff.

The change is then published in the Canada Gazette.

Legally, no. In practice, yes.

The government has reportedly identified potential counter-tariffs on $37 billion in goods that could be imposed quickly and is considering a consultation period of 15 to 30 days.

The government is reportedly also looking at additional retaliatory tariffs on $110 billion in goods.

When the government imposed a 100 per cent surtax on electric and hybrid vehicles from China last year, it was preceded by a month-long consultation in July 2024 on potential responses to unfair Chinese trade practices. It received 232 submissions, including from industry and labour organizations, businesses, provinces, non-governmental organizations and individual Canadians.

Ian Lee, a business professor at Carleton University, says changes to things like taxes and tariffs can have big consequences for Canadian businesses. Lee says that's why it has been standard practice over the years for the Finance Ministry to hold consultations with Canadians and business groups when they are contemplating tax changes.

"That's so that there aren't all kinds of screw ups, and injustices and problems caused that are going to take even more effort to fix or to correct," he said.

Once the government decides to impose a tariff, it can take effect quite quickly. For example, the federal government adopted an order in council on Sept. 20 to impose the surtax on electric and hybrid vehicles produced in China and scheduled the measure to go into effect Oct. 1. Goods that were already in transit when the measure went into effect were exempted. 

The CBSA has not yet responded to questions on how long it takes the agency to begin imposing tariffs once they are adopted by the government. Companies importing goods also have to make changes to their systems.