It started as what appeared to be a case of online trolling, but hours after his inauguration on Monday (Jan. 20), U.S. President Donald Trump signaled his plan to impose previously-threatened tariffs of as much as 25 per cent on Canada (and Mexico) by February 1.
If activated, Canada could face an economic bruising, resulting in potentially catastrophic effects on prices, jobs and the economy in general – especially given that three-quarters of everything Canada sells to the world, it sells to the United States.
The Canadian government, following weeks of strategizing ever since Trump first alluded to his tariff proposal on his social media in November, is bracing for impact.
“None of this should be surprising,” Finance Minister Dominic LeBlanc said Monday to reporters at a Liberal cabinet retreat in Montebello, QC, as reported by CBC News. “The one thing we’ve learned is that President Trump, at moments, can be unpredictable.”
Trump announced the February 1 deadline after signing executive orders at the White House last night, citing illegal migration and the trafficking of fentanyl at the border.
The hope among federal and provincial leaders, however, was that he wouldn’t act right away and take time to study trade dynamics – an outcome that was previously hinted at.
The situation, now, appears to be no different than it was one week ago, Minister LeBlanc said yesterday.
“We have spent the last number of weeks preparing potential response scenarios for the Government of Canada in partnership with provinces and Canadian business leaders and union leaders,” LeBlanc was quoted as saying. “So our country is absolutely ready to respond to any one of these scenarios.”
A retaliation plan is reportedly in the works. The Canadian government says it would impose retaliatory tariffs of its own on U.S. goods entering Canada – an idea that may feel good right now, but could also result in more harm than good, some argue.
Either way, Foreign Affairs Minister Melanie Joly is reassuring Canadians that Ottawa has a plan.
“We need to continue to fight for our interests, to defend jobs across the country, and we’re calling every single political leader across the board, across the country, to stand united,” Joly said Monday night.
Canada’s economic conditions directly affect disposable income and consumer spending, which, if it’s severe enough, can have a negative impact on the travel industry.
Should Canadian travel advisors be worried about Trump’s tariff proposals and the potential disruptions it may have on travel spending?
The Canadian travel industry is “at a crossroads,” said Zeina Gedeon, CEO of Trevello Travel Group, in a statement to PAX on Tuesday (Jan. 21)
“A 25 per cent tariff could mean higher prices for everything from travel packages to cross-border shopping, potentially reducing the disposable income families have for vacations,” Gedeon said. “The ripple effect could be significant. Fewer trips to the United States, more cautious spending, less disposable income for travel, and a shift towards more budget-friendly travel options.”
At the same time, Gedeon believes the situation presents an opportunity for advisors to promote domestic travel “and show Canadians the amazing experiences right here at home.”
“By working together—travel businesses, government, and industry leaders—we can find ways to adapt, support our travellers, and keep our industry strong, no matter what comes next,” she said.
“It’s a time for collaboration and creativity, ensuring that travel remains a key part of Canadians’ lives, even in uncertain times. By focusing on what makes Canadian travel special, we can turn economic challenges into a chance to reinvent and reimagine travel.”
Gregory Luciani, CEO of TravelOnly, believes President Trump knows that a broad 25 per cent tariff on Canadian imports “would have negative impacts on the U.S. economy.”
“I perceive President Trump’s tariff threats as strategic negotiation tactic,” Luciani told PAX. “While he has announced a 25 per cent tariff on all Canadian imports, I believe he will initially direct federal agencies to evaluate our trade relationship rather than implementing new tariffs immediately.”
Luciani said it’s “likely” that specific industries or products may be targeted in the future.
“However, considering the deeply integrated nature of the U.S-Canada relationship, such measures would adversely affect both economies,” he said.
Luciani ultimately doesn’t think Trump will follow through. “It doesn’t make any financial sense or benefit America in any way,” he said. “I’ve been wrong before, and if I’m wrong here, Canada will retaliate in kind with its own tariffs on U.S. goods, which forces both nations to the bargaining table right away to work out a better solution.”
If the tariff does go through, however, “travel to the U.S. will decline at the benefit of Mexico, Europe, Asia and the Caribbean,” Luciani said.
The “biggest threat” to the Canadian travel industry in 2025, Luciani said, is the declining value of Canada’s currency versus the U.S. dollar and Euro “as it will make travel more expensive for every Canadian.”
Economy experts have hinted that the next few months will be a rough go for the Canadian dollar as it falls.
The loonie won a slight reprieve yesterday after President Trump did not immediately impose tariffs on imports. It bounced up 1.25 per cent to 69.86 cents U.S. Monday following the new president’s inauguration.
Trump’s re-election has hit the Canadian dollar hard, however. Prior to Monday, the loonie had fallen 4.5 per cent since Nov. 5, a decline that analysts have attributed to both the tariff threat and the President’s broader strategy.
On Friday, the Canadian dollar almost fell below 69 cents U.S. – its lowest level since March 2020 when the COVID-19 pandemic took hold.
As for Trump’s tariffs, Flemming Friisdahl, founder of The Travel Agent Next Door, says “time will tell.”
“Travel is something that consumers want to do and the U.S. is a major destination,” Friisdahl told PAX. “No matter what, they want to get out of the cold, do a destination wedding, take a cruise, do a bucket list trip. Most Canadians feel that to travel is a right and not just a nice thing to do.”
He agrees that the “bigger concern” for Canadians, right now, is the weak loonie.
“Let’s hope we see the Canadian dollar get stronger,” he said.
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