Fact-checking Trump’s executive order threatening tariffs on Canada #CanadaFinance
Financial Insights That Matter
OTTAWA — To justify his executive order imposing stiff tariffs on goods from Canada, Mexico and China, U.S. President Donald Trump cited an “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl.”
Trump agreed Monday to pause the planned tariffs against Canada and Mexico for 30 days in response to both countries promising to bolster border security.
Here’s a look at some of the claims Trump made in his recent executive order and an accompanying fact sheet.
Trade deficit
The Trump administration has expressed concerns about the United States’ trade deficit in goods, saying it’s the world’s largest — over $1 trillion in 2023 — and linking it to the president’s plan to impose tariffs.
“Tariffs are a powerful, proven source of leverage for protecting the national interest,” says the Feb. 1 fact sheet from the White House. “President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first.”
Trump has claimed the U.S. can no longer suffer the massive trade deficits and subsidies that he says Canada needs to stay afloat. He also has claimed his country is losing $200 billion a year to its northern neighbour.
A recent analysis by TD Economics says Canada is the largest export market for the U.S. and accounts for one of the United States’ smallest trade deficits, largely due to U.S. demand for energy-related products.
Based on Statistics Canada data, Canada’s merchandise trade surplus with the U.S. last year was on track to reach $100 billion, the analysis says.
“The U.S., however, enjoys an edge in services trade, mainly related to Canadians flowing over the American border,” TD Economics says. That reduces the trade surplus to $85 billion, or 2.8 per cent of Canadian gross domestic product.
Citing U.S. Census Bureau figures, the TD analysis says America was on track to record an even lower trade deficit with Canada of about US$45 billion in 2024, or $65 billion in Canadian dollars.
TD says it’s not clear how Trump came up with his $200 billion figure (presumably in U.S. dollars).
“In any event, a trade deficit is not a subsidy,” the analysis says. “That would ring true, if for example, the U.S. government transferred US$45 billion annually to Canadian companies out of goodwill, but Americans are receiving value for the dollars spent in the form of goods and services.”
Migrants
The fact sheet claims more than 10 million illegal aliens attempted to enter the United States under former president Joe Biden’s leadership, including a growing number of Chinese nationals and people on the terror watch list.
“This problem is not confined to the southern border — encounters at the northern border with Canada are rising as well,” it says.
The number of people apprehended by the U.S. Border Patrol along the northern border did indeed climb to 23,721 in the 2024 fiscal year, from 2,238 in 2022, according to U.S. Customs and Border Protection statistics.
But the numbers have been steadily dropping since peaking last June.
By comparison, there were more than 1.5 million encounters with the Border Patrol along the U.S. border with Mexico in 2024.
Fentanyl
The fact sheet says that in the last fiscal year, U.S. Customs and Border Protection seized more than 21,000 pounds of fentanyl at the United States’ borders, enough to kill more than four billion people.
Almost all of that fentanyl was apprehended at the southwest border.
According to U.S. border agency figures, a mere 43 pounds of fentanyl was seized from people crossing the northern border during the same period.
“At present, most U.S.-destined illicit fentanyl appears to be produced clandestinely in Mexico, using chemical precursors from China,” says a December 2024 report by the U.S. Congressional Research Service.
Fintrac report
The executive order says Canada’s Financial Transactions and Reports Analysis Centre, known as Fintrac, recently published a study on the laundering of proceeds from illicit synthetic opioids — recognizing Canada’s heightened domestic production of fentanyl, largely in British Columbia, and its growing footprint within international narcotics distribution.
The Fintrac alert released in January says that before 2020, North America was primarily a consumer and destination continent for illicit-market opioids, specifically fentanyl, which was largely imported from China.
“In more recent years, trafficking networks have increased the production of fentanyl and other synthetic opioids as well as their distribution both domestically and internationally from North America, including Canada, the United States and Mexico,” the report says.
Fintrac provides few details on the scope or destination of such international exports.
Public Safety Minister David McGuinty has repeatedly pointed to the relatively small amount of fentanyl crossing into the U.S. from Canada.
“Despite evidence of domestic production occurring in Canada, there is little to no evidence from either Canadian or U.S. law enforcement that Canadian-produced fentanyl is an increasing threat to the United States,” says a Dec. 10, 2024 briefing note from Public Safety.
Co-operation
“Gang members, smugglers, human traffickers, and illicit drugs of all kinds have poured across our borders and into our communities,” says the executive order.
“Canada has played a central role in these challenges, including by failing to devote sufficient attention and resources or meaningfully co-ordinate with United States law enforcement partners to effectively stem the tide of illicit drugs.”
The record shows Ottawa has made efforts to tackle the scourge of opioids.
Canada has worked with the United States and Mexico through the North American Drug Dialogue to co-ordinate policy, exchange information on drug trends and develop tactical responses to help protect people from the trafficking of substances and drug-related harms, the Fintrac alert says.
In addition, the RCMP works to detect, investigate and disrupt criminal threats to public safety by targeting transnational and serious organized crime groups involved in the production and trafficking of illegal substances, including opioids, says the Public Safety briefing note.
“As a result, 44 clandestine drug labs have been dismantled by the RCMP and local police services since 2018, protecting Canadians from millions of potentially harmful doses of drugs,” says the briefing note.
Late last year, in response to Trump’s threatened tariffs, Canada announced a $1.3-billion upgrade to border security and monitoring.
The initiative included plans to create an aerial intelligence task force to provide round-the-clock surveillance of Canada’s border using helicopters, drones and surveillance towers.
In addition, Canada has proposed the creation of a North American “joint strike force” to target organized crime groups that work across borders.
The government also intends to provide new technology, tools and resources to the Canada Border Services Agency to seek out deadly fentanyl using chemical detection, artificial intelligence and canine teams.
This report by The Canadian Press was first published Feb. 4, 2025.
Jim Bronskill, The Canadian Press
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