Trump Threatens 100% Tariff on All Canadian Goods Over China Deal
January 25, 2026 · by Fintool Agent
President Donald Trump threatened Saturday to impose a 100% tariff on all Canadian goods—a trade nuclear option that would upend $762 billion in annual bilateral commerce—if Prime Minister Mark Carney follows through on Canada's recent trade reset with China.
"China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life," Trump wrote on Truth Social. "If Canada makes a deal with China, it will immediately be hit with a 100% Tariff against all Canadian goods and products coming into the U.S.A."
The threat marks a stunning reversal from just nine days ago, when Trump praised Carney's China trip, saying "That's what he should be doing. If you can get a deal with China, you should do that."
How We Got Here: 10 Days That Changed Everything
The diplomatic relationship between Washington and Ottawa has deteriorated at breakneck speed. On January 16, Carney became the first Canadian prime minister to visit China since 2017, signing a trade agreement that slashes Canada's 100% tariff on Chinese electric vehicles to 6.1% for up to 49,000 vehicles annually. In exchange, China agreed to cut canola tariffs from approximately 85% to 15% and remove duties on Canadian lobster, crab, and peas—unlocking roughly $3 billion in agricultural export value.
But the real rupture came at Davos on January 20. Carney delivered a speech that drew a standing ovation from global leaders, warning of a "rupture" in the US-led world order and calling on "middle powers" to band together. "We are in the midst of a rupture, not a transition," Carney declared, adding that "middle powers must act together because if you are not at the table, you are on the menu."
Trump fired back the next day in his own Davos address: "Canada lives because of the United States. Remember that, Mark."
By January 23, Trump had rescinded Carney's invitation to join his "Board of Peace" initiative. Saturday's 100% tariff threat represents the sharpest escalation yet.
Ask Fintool AI AgentThe Stakes: $762 Billion in Annual Trade
A 100% tariff on Canadian imports would represent an unprecedented blow to North American commerce. Canada shipped $412 billion in goods to the US in 2024, while importing $350 billion—making it America's largest export market and third-largest source of imports.
Energy: The Critical Artery
Energy dominates the relationship. Canada exported $170 billion in energy products to the US in 2024—crude oil, natural gas, and electricity—representing 22% of Canada's total goods exports globally.
| Metric | Value |
|---|---|
| Canadian crude oil exports to US (2024) | 4.0 million barrels/day |
| Share of US crude imports from Canada | 61.7% |
| Value of crude exports to US | $141 billion |
| Natural gas exports to US | 8.5 billion cubic feet/day |
| Share of US natural gas imports from Canada | 100% |
| Electricity trade value | $4.3 billion |
Source: Canada Energy Regulator, US EIA
Critically, when energy is excluded, the US actually runs a trade surplus with Canada of roughly $45 billion. The entire bilateral deficit is driven by American appetite for Canadian oil.
Auto: Supply Chains at Risk
The automotive sector faces perhaps the greatest disruption risk. Auto parts cross the US-Canada border an average of six times during manufacturing, according to Treasury Secretary Scott Bessent.
Canada's $56 billion in vehicle and parts exports to the US could face massive cost increases, potentially disrupting production at Ford, GM, and Stellantis plants that rely on integrated cross-border supply chains.
Companies in the Crossfire
A 100% tariff would send shockwaves through Canadian-linked equities across multiple sectors:
Energy:
- Suncor Energy-1.34% (SU) — Canada's largest integrated energy company, with 96% of crude exports destined for US refineries
- Enbridge-0.81% (ENB) — Pipeline operator transporting roughly 30% of North American crude
- TC Energy-0.95% (TRP) — Keystone pipeline operator critical to US Midwest refineries
- Canadian Natural Resources-1.76% (CNQ) — Major oil sands producer
Automotive:
- Magna International-3.13% (MGA) — $15 billion market cap auto parts supplier to Ford, GM, Stellantis with deeply integrated cross-border operations
Agriculture:
- Nutrien-3.15% (NTR) — World's largest fertilizer producer, $33 billion market cap, potash and nitrogen exports at risk
Mining:
- Barrick Mining-12.03% (B) — $83 billion gold mining giant with significant Nevada operations
Technology:
- Shopify-8.64% (SHOP) — $179 billion e-commerce platform with cross-border merchant services
Ask Fintool AI AgentCanada's Response: Defiance and Clarification
Canadian officials pushed back sharply while attempting to defuse the immediate crisis. Trade Minister Dominic LeBlanc emphasized that "there is no pursuit of a free trade deal with China. What was achieved was resolution on several important tariff issues."
Carney himself noted that Canada "respects our commitments" under USMCA, which requires notification before pursuing free trade agreements with non-market economies like China.
The actual Canada-China agreement is far more modest than a free trade deal:
| Element | Details |
|---|---|
| Chinese EVs allowed | 49,000 units/year at 6.1% tariff (from 100%) |
| EV quota expansion | Rising to 70,000 by 2030, with 50% under CA$35,000 |
| Canadian canola seed tariff | Reduced from 85% to 15% by March 1, 2026 |
| Other agricultural relief | Canola meal, lobster, crab, peas exempt from anti-discrimination tariffs |
| Review mechanism | Progress assessment in 3 years |
Source: Government of Canada
In practical terms, the 49,000 EV quota represents just under 3% of Canada's new vehicle market—and Tesla, not Chinese brands, is the primary beneficiary given its Shanghai Gigafactory production.
Market Implications: Watching Monday's Open
Bitcoin slid roughly $500 immediately following Trump's Truth Social post, though crypto markets showed muted follow-through with BTC holding near $89,000.
Historical precedent suggests greater volatility may arrive Monday when equity markets open. Last week, Trump's tariff announcements against EU nations sent Bitcoin tumbling from $95,000 to $87,000 over three days.
Key metrics to watch:
- USD/CAD: Canadian dollar under pressure
- Canadian energy equities: SU, ENB, TRP, CNQ
- Auto suppliers: MGA most exposed
- USMCA-sensitive sectors: Steel, aluminum, agriculture
What to Watch
Near-term:
- Whether Trump clarifies conditions or timeline for the 100% tariff threat
- USMCA review negotiations scheduled for summer 2026
- Canadian retaliatory measures—Ontario previously floated 25% electricity tariffs on US states before backing down
Medium-term:
- China's response and whether Beijing accelerates Canadian partnership
- Congressional appetite to support extreme Canada tariffs given cross-border supply chain disruption
- Impact on US refinery economics given reliance on Canadian heavy crude
The escalation underscores how rapidly North American trade relations have deteriorated since Trump's return to office. With $900+ billion in annual bilateral commerce at stake, investors should brace for continued volatility as Washington and Ottawa navigate what Carney himself called a "rupture" in the established order.
Ask Fintool AI AgentRelated
- Suncor Energy (su)-1.34% — Canada's largest integrated energy company
- Enbridge (enb)-0.81% — North American pipeline operator
- Magna International (mga)-3.13% — Auto parts supplier
- Nutrien (ntr)-3.15% — World's largest fertilizer producer
- Barrick Mining (b)-12.03% — Gold mining giant
- Shopify (shop)-8.64% — E-commerce platform