Trump threatens new 100% tariffs on Canada over possible trade deal with China

By Auzinea Bacon, CNN

(CNN) — President Donald Trump on Saturday threatened to slap 100% tariffs on Canadian imports if America’s second-biggest trading partner makes a trade deal with China.

The comments threaten to deepen the divide between Trump and Canadian Prime Minister Mark Carney, after back-and-forth threats to impose tariffs on Canadian goods, including 10% duties, after Ontario’s ad featuring former President Ronald Reagan’s speech about tariffs.

Trump mockingly referred to Carney as “governor,” a term he has also used for former Prime Minister Justin Trudeau, playing off his call for Canada to become the 51st US state.

“If Governor Carney thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken. China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life,” Trump posted on Truth Social.

“The last thing the World needs is to have China take over Canada. It’s NOT going to happen, or even come close to happening!” the president added in a follow-up post to his social media platform.

It’s a turnaround from Trump’s previous comments. The president told reporters on January 16 that, “It’s a good thing for (Carney) to sign a trade deal. If you can get a deal with China, he should do that.”

Trump is ‘lashing out’ against other economies

Earlier this month, Carney met with Chinese President Xi Jinping on his turf, where they formed a “new strategic partnership,” with Canada easing tariffs on Chinese EVs and allowing up to 49,000 Chinese electric vehicles into its market annually. China is also expected to reduce tariff barriers on Canadian canola seed, lobster and peas later this year.

It’s unclear what would classify as a “deal” to trigger the tariffs against Canada. The White House did not immediately respond to CNN’s request for comment.

“As the Prime Minister (Carney) stated this week, Canada and the United States have established a remarkable partnership in the areas of the economy and security, and we will continue to ensure that the future of this relationship benefits workers and businesses on both sides of the border,” Dominic LeBlanc, Canada’s finance minister, posted on X after Trump’s comments. “There is no pursuit of a free trade agreement with China. What has been achieved is a resolution on several important tariff issues.”

Trump’s threat comes after Carney charted a path forward for Canada on Tuesday, warning that stronger countries have been using “economic integration as weapons,” “tariffs as leverage,” and “supply chains as vulnerabilities to be exploited.”

While he did not name the US in his speech at the World Economic Forum in Davos, Switzerland, Carney characterized it as a global “rupture” and not a transition, adding that “middle powers must act together because if we’re not at the table, we’re on the menu.”

The threat also comes just a week after Trump vowed to impose a 10% tariff on “any and all goods” from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland starting February 1, unless an agreement was reached for the US to acquire Greenland. Trump said on Wednesday, however, that tariffs were no longer needed because a framework had been reached.

“It sounds like Trump is lashing out at Carney for stealing the limelight at Davos. (Trump) didn’t get his tariffs over Greenland, so now he’s searching for another target to threaten,” said Inu Manak, senior fellow for international trade at the Council on Foreign Relations.

An uncertain economic impact

It’s unclear what impact these new 100% tariffs could have, if and when they are imposed. Canadian goods that are compliant under the United States-Mexico-Canada Agreement (USMCA) have been exempt from other Trump levies. Trump brokered that agreement in his first term, and it will be under review this year.

Manak told CNN in an email that the USMCA allows the countries to terminate the agreement if one enters a free trade agreement with a non-market economy like China. But if Trump claims Canada violated the USMCA through its latest agreement with China, it may put the United States’ soybean deal with China under similar scrutiny, she said.

“It doesn’t make sense as of yet for Trump to bring this up, which is why I think he’s just making a random tariff threat instead,” she said.

Trump’s steep sectoral tariffs on autos, steel, aluminum, lumber and energy — some of the country’s key exports to the United States — have hit Canada especially hard. During October, Canada’s unemployment rate reached its highest point in nine years.

Threatening tariffs last year “already violated the trade agreement,” said Erica York, vice president of federal tax policy at the Tax Foundation.

“If (Trump) follows through, it would mean the US is imposing harsher trade restrictions on imports from Canada than from China,” she added.

It’s also hurting the US economy because of Canadian boycotts. According to data from Statistics Canada, Canadian travel to the US by land is down 31% this year through the end of September. Exports of American spirits to Canada plunged by 85% in the second quarter, according to the Distilled Spirits Council of the United States.

Trump’s threats to impose tariffs on Canada could be another situation where Trump backs down, which investors have deemed “TACO,” or “Trump Always Chickens Out.”

York doubts that Trump’s latest threat of 100% tariffs will take effect. But the threat alone “illustrates how erratic and unreliable US trade policy is at this moment.”

The Supreme Court is expected to rule in the coming weeks on whether Trump can use the emergency powers granted in the International Emergency Economic Powers Act to impose tariffs. Justices have appeared skeptical of the Trump administration’s use of that law, because it makes no mention of tariffs.

Trump’s comments on Truth Social also come after heated words between the two leaders.

“Canada lives because of the United States,” Trump said Wednesday in an address at the World Economic Forum in Davos. “Remember that, Mark, the next time you make your statements.”

Carney responded on Thursday that, “Canada doesn’t live because of the United States. Canada thrives because we are Canadian.”

This story has been updated with additional content.

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CNN’s Kit Maher and Simone McCarthy contributed to this report.