Canada and Mexico brace for Trump's tariffs with a 'cool head'

President Trump says he will smack North American neighbors with tariffs on Saturday, while leaders in Mexico and Canada say they are ready to hit back.

“We have a plan A, B and C depending on what the U.S. government decides,” Mexican President Claudia Sheinbaum said at a press conference Friday.

Mexico is the U.S.’s largest trading partner. Blanket tariffs of 25%, the figure proposed by Mr. Trump, could impact a bevy of goods it sends north, from automobiles to fruit.

Tariffs are a form of tax or duty paid on imports. Mr. Trump says tariffs are a great way to force companies to return to America or keep their operations in the U.S., employ American workers and create revenue to fund domestic programs.

The president said he had no choice but to impose levies so that Canada and Mexico would crack down on illegal migration and drug trafficking. He also doesn’t like the trade deficits that the U.S. runs with those countries, saying they amount to “subsidies.”

The White House is expected to fill in the lines of its plans in the coming days, including whether oil imports would be impacted.

“We will always defend the dignity of our people, respect for our sovereignty and a dialogue as equals without subordination,” Ms. Sheinbaum said. “We will wait, as I have always said, with a cool head, when taking decisions. We are prepared and we maintain this dialogue.”

To the north, Canadian Prime Minister Justin Trudeau has pledged a “strong” response to any U.S. tariffs.

Another leading official in Canada is floating a tough response as she runs for prime minister. Chrystia Freeland, a Liberal Party member, outlined a six-point plan to respond to Mr. Trump’s tariffs.

She wants to publish a detailed, “dollar-for-dollar” list of retaliatory tariffs and called for a summit among countries targeted — economically or territorially — by Mr. Trump, including Mexico, Panama, Greenland, Denmark and the European Union.

She would direct the Canadian federal government to stop buying goods from U.S. companies, block American companies from bidding on Canadian government contracts and ban U.S. firms from projects funded by Ottawa.

The final bullet point says Canada would defend its “cultural sector and artists from Donald Trump’s billionaire buddies.”

The U.S. relied on tariffs as a primary source of government revenue until the federal income tax was imposed in the early 20th century.

Some economists are skeptical about using tariffs as a revenue generator.

Despite Mr. Trump’s assertion, foreign countries don’t pay the tariffs directly to the U.S. Treasury. Companies pay the levies and often pass on at least some of the cost to consumers through higher prices.