Tariff threats had sparked fears of a recession, trade war, and a potential sea change in the Bank of Canada's approach

Image from Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0, via Wikimedia Commons
President-elect Donald Trump vowed to impose sweeping tariffs on Canada, Mexico and China on his first day back in office – but multiple reports in the US are suggesting that his administration will hold off on those measures for today.
In a bombshell Truth Social post in November, Trump said he would introduce a 25% tariff on all Canadian goods entering the country if border security didn’t improve, a measure that sparked fears of a recession in Canada and raised the prospect of a trade war between the two neighbours.
But Reuters said on Monday that Trump, who will take office at about midday today, has been reviewing other options including a 10% tariff on goods from all countries and a tariff that rises over time.
A Trump administration official told the news agency that the incoming president would direct agencies to “investigate and remedy persistent trade deficits and address unfair trade and currency policies by other nations.”
China, Canada, and Mexico will be specifically mentioned but no action will be taken against those countries yet, according to the official.
The Bank of Canada described Trump’s tariff threats as a “major new source of uncertainty” in December and highlighted the potential for significant disruption to both the US and Canadian economies as a result.
Retaliatory measures by Canada could see inflation jump, Governor Tiff Macklem suggested, potentially complicating the central bank’s path forward on rate cuts. “If there is a big change, we’re going to have to take that on board,” he said. “Hopefully that doesn’t happen.”
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