Canada is prepared to offer pandemic-level financial support to workers and businesses if the US imposes tariffs

The federal government is preparing a multibillion-dollar relief package for workers and businesses if U.S. President Donald Trump proceeds with his threat to impose 25% tariffs on Canadian goods as early as February 1, according to two sources.

Some of the proposed measures, like waiving the one-week waiting period for unemployment benefits, can be implemented without parliamentary approval. However, most of the new programs aimed at assisting laid-off workers and businesses impacted by the tariffs would require legislative approval, which would not be possible until Parliament reconvenes on March 24.

The sources, who were not authorized to discuss cabinet discussions, asked not to be identified.

Prime Minister Justin Trudeau prorogued Parliament on January 6, the same day he announced his decision to step down and initiate a leadership contest due to the threat of opposition parties defeating him. This suspension halted parliamentary activities, including sessions in the House of Commons and Senate.

The government anticipates that U.S. tariffs could lead to widespread layoffs and an increase in the cost of goods for consumers. In response, Canadian companies may not only reduce jobs but also scale back production, causing financial losses and potentially leading to closures. The proposed emergency measures would assist Canadians with rent and grocery expenses, as well as help businesses cover bills and payroll.

Ontario Premier Doug Ford, who is expected to call an election this week, has stated that tens of billions of dollars in pandemic-style spending would be necessary to sustain the economy in the face of U.S. tariffs. He also predicted that the tariffs could result in the loss of 500,000 jobs in Ontario.

In response to the COVID-19 pandemic in 2020, the government introduced an $82-billion aid package for Canadians and businesses, which included income support, wage subsidies, and tax deferrals. This package allocated $27 billion in direct support to workers and $55 billion to assist business liquidity through tax deferrals.

One of the sources mentioned that the federal cabinet believes billions in aid do not need to be distributed immediately, even if Trump imposes the tariffs on February 1. They pointed to a January 20 executive order from Trump, which suggests a different timeline. The "America First Trade Policy" order directs federal officials, including the Secretary of Commerce, to investigate U.S. trade deficits with major trading partners by April 1, as well as evaluate "unlawful migration and fentanyl flows" from Canada, Mexico, and China, and recommend appropriate trade and national security measures.

The source added that the aid package could be ready once Parliament resumes, but it would require cooperation from opposition parties to delay their plans to bring down the minority Liberal government until the relief legislation is passed. The Conservatives, Bloc Québécois, and NDP have all stated that they would defeat the Liberal government at the first available opportunity.