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Donald Trump’s dinner meetings are never boring, but his recent one with Canadian Prime Minister Justin Trudeau at Mar-a-Lago might go down in history as the most audacious. Between the high-end steak and well-aged wine, Trump reportedly suggested that Canada should consider becoming the 51st state of the United States if it can’t manage its economy under his looming 25% tariffs.

“If your country can’t survive unless it’s ripping off the U.S. to the tune of $100 billion, maybe it should become a state.”

– Donald Trump

With three-fourths of Canada’s exports dependent on the U.S. market, Trump’s threat was a potential death knell for Canada’s economy, forcing the Canadian leader to start scrambling for solutions.

Tariffs: Economic warfare or a dealbreaker?

Trump has never hidden his disdain for trade deficits or what he calls “unfair trade practices.” So of course he wants protectionist trade policies. That’s the America First agenda.

His latest salvo—a proposed 25% tariff on Canadian goods—was positioned as a response to perceived failures by Canada to control drug smuggling and illegal migration across their shared border.

Roughly 75% of Canada’s exports head south of the border, making the U.S. its lifeline. Economists estimate that these tariffs could slash Canada’s GDP by 2.4% within two years and eliminate up to 1.5 million jobs. 

The Canadian economy could spiral, with effects likely hitting industries ranging from lumber to automotive manufacturing.

Trudeau, caught between a rock and a hard place, argued that such tariffs would backfire, hurting U.S. consumers as much as Canadian producers. “These tariffs would kill our industries,” Trudeau reportedly said, emphasizing that costs for American citizens would inevitably rise.

Essential goods like timber, steel, and even groceries could see price hikes, making Trump’s tariff plan a political gamble on both sides of the border.

Dominic LeBlanc, Canada’s Public Safety Minister, labeled Trump’s strategy as “reckless” in Canadian Parliament. “This isn’t just about Canada,” he said. “The U.S. would face supply chain disruptions, higher prices, and industrial slowdowns.”

Trump says Trudeau could be Governor

Trump’s latest comments, though humorous on the surface, carried a chilling undertone. For a nation as proud of its sovereignty as Canada, the remark was nothing short of incendiary.

The US president went even further, offering Trudeau a hypothetical deal: retain his title as prime minister but also take on the role of governor if Canada were absorbed into the U.S. The statement reeked of provocation, which Trudeau countered with a pointed response.

While refraining from escalating the rhetoric, he made it clear that Canada wouldn’t entertain such notions. “Canada is a sovereign nation,” Trudeau reportedly said, maintaining a calm but firm tone. Yet behind closed doors, Canadian officials are undoubtedly calculating the potential fallout of a prolonged economic standoff.

Implications on the global economy

If Trump’s tariffs become a reality, the consequences will stretch far beyond Canada, or even China and Mexico. Economists warn that global financial markets will be caught in the crossfire too.

The World Bank estimates that tariffs on this scale could knock global GDP growth down by at least 0.5%, dragging major economies into slower recovery trajectories after years of pandemic-driven uncertainty.

Meanwhile, with its own trade relationship with the U.S. already strained, China could be affected as North American tariffs disrupt global commodity flows.

At the same time, Canada is exploring diversification strategies, seeking to reduce its dependence on the U.S. market. Trade agreements with the European Union and Pacific nations are back on the table as potential lifelines, though economists warn such shifts will take years to materialize.

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