What does a 2nd Trump term mean for Canada? To start, steep tariffs and pressure to spend more on military

On the campaign trail for the 2024 presidency, Donald Trump threatened a minimum 10 per cent global tariff on all imported products, memorably calling "tariff" the "most beautiful word in the dictionary."

Now that he's won a second presidency, Canada and other U.S. trading partners are girding for Trump to put that word into action.

On Tuesday morning, Prime Minister Justin Trudeau congratulated Trump on his victory and noted, "the friendship between Canada and the U.S. is the envy of the world. I know President Trump and I will work together to create more opportunity, prosperity and security for both of our nations."

But some experts have suggested the promise of a sweeping tariff could result in a devastating five per cent loss in GDP.

For Canadian veterans of the trade battles with the first Trump administration, there is a sense of déja vu. 

"Welcome back to an administration that put national security tariffs on the Canadian aluminum that its own military buys to make a point no one understood," said Flavio Volpe, head of Canada's auto-parts lobby association, referring to Trump's move in 2020 to slap a 10 per cent tariff on most Canadian aluminum.

Volpe held out hope that Canada's co-operation with the U.S. to keep out Chinese imports might create common ground between the two countries. 

But the big change from Trump's first term is that he's now talking about placing tariffs on everything, from everywhere, describing the move as a strategy to force manufacturers to build in the U.S.

During a rally in Raleigh, N.C., on Monday, Trump threatened Mexico "on Day 1 or even sooner" with a 25 per cent tariff on all goods imported from Mexico unless the country put a stop to the influx of illegal immigrants. He vowed the tariff would rise to 50 per cent and then 75 per cent if that failed to yield results.

Deputy Prime Minister Chrystia Freeland has tried to reassure Canadians worried about the election results that the government had good relationships with both Democrats and Republicans.

Still, with nearly $3.6 billion worth of goods and services flowing across the Canada-U.S. border each day, Trump's proposal of a minimum 10 per cent global tariff would have significant impact on Canada's economy.

It's believed Ottawa will try negotiating an exemption to the tariff, and failing that, will consider trying to dissuade Trump from imposing it, which brings the threat of retaliation from the U.S., which in turn risks plunging Canada into a painful trade war with its southern neighbour.

Canada's ambassador to Washington mused publicly about the possibility of retaliation from the U.S. if there's no exemption.

A recent report from TD Economics was more optimistic, saying Trump's best and most likely use of tariffs would be as a bargaining chip to force Canada into concessions when it comes time to renegotiate CUSMA — the trade agreement between Canada, the U.S. and Mexico — in 2026.