Business and political leaders in Canada say there will be pain if Donald Trump follows through on his pledge to impose a 25 per cent tariff on all Canadian goods, but they note the hurt will happen in his country as well.

The president-elect posted to Truth Social on Monday he will sign an executive order imposing a 25 per cent tariff on all products coming in to the United States from Canada and Mexico.

He said the tariff will remain in place until both countries stop drugs, in particular fentanyl, and people from illegally crossing the borders.

The threat was met with a call to action by the Canadian Chamber of Commerce, which said Canada needs to urgently adapt its approach to trade talks with the U.S.

The chamber鈥檚 president and CEO Candace Laing said that 鈥渂eing America鈥檚 鈥榥ice neighbour鈥� won鈥檛 get us anywhere.鈥�

鈥淧resident-elect Trump鈥檚 intention to impose 25 per cent tariffs signals that the U.S.-Canada trade relationship is no longer about mutual benefit. To him, it鈥檚 about winners and losers 鈥� with Canada on the losing end,鈥� said Laing in a statement on Tuesday.

鈥淲e鈥檙e facing a significant shift in the relationship between long-standing allies. Canada鈥檚 signature approach needs to evolve: we must be prepared to take a couple of punches if we鈥檙e going to stake out our position. It鈥檚 time to trade 鈥榮orry鈥� for 鈥榮orry, not sorry.鈥欌��

Prime Minister Justin Trudeau told reporters on Tuesday that he spoke with Trump after the president-elect鈥檚 announcement on social media and described it as 鈥渁 good call.鈥�

鈥淲e talked about some of the challenges that we can work on together,鈥� he said.

鈥淭his is something that we can do: laying out the facts, moving forward in constructive ways. This is a relationship that we know takes a certain amount of working on and that鈥檚 what we鈥檒l do.鈥�

The two leaders agreed to stay in touch. Trudeau said he also had calls with Ontario Premier Doug Ford and Quebec Premier Fran莽ois Legault, and agreed to hold a first ministers meeting this week 鈥渢o talk about the United States.鈥�

鈥淥ne of the really important things is that we be all pulling together on this,鈥� Trudeau said.

鈥淭he 鈥楾eam Canada鈥� approach is what works.鈥�

Previous modelling by the Canadian Chamber of Commerce suggested a 10 per cent across-the-board tariff would reduce the size of the Canadian economy between 0.9 and one per cent, resulting in around $30 billion per year in economic costs.

It estimated the U.S. would see around US$125 billion a year in economic costs.

University of Calgary economist Trevor Tombe, who authored the chamber鈥檚 report on that modelling before the U.S. election, said on X that the Canadian economy would take an annual real GDP hit of around 2.6 per cent when updating for a 25 per cent tariff.

That would equate to around $2,000 per person, he said.

Ford posted on social media that a 25 per cent tariff would be devastating to workers and jobs in both Canada and the U.S.

Legault tweeted that everything must be done to avoid the tariffs, and British Columbia Premier David Eby posted Trump鈥檚 tariffs 鈥渨ould hurt Canadians and Americans alike.鈥�

鈥淐anadians must stand united. Ottawa must respond with strength,鈥� Eby tweeted.

Alberta Premier Danielle Smith said in a social media post that the Trump administration has 鈥渧alid concerns related to illegal activities鈥� at the border. But she noted vast majority of her province鈥檚 energy exports to the U.S. are 鈥渄elivered through secure and safe pipelines鈥� which she said 鈥渄o not in any way contribute to these illegal activities.鈥�

Canadian American Business Council CEO Beth Burke said in a statement Monday night that Trump鈥檚 proposal would harm businesses on both sides of the border and would 鈥渆rode the economic and geopolitical strength of North America.鈥�

The Canadian dollar traded for 71.02 cents US early Tuesday morning, down from 71.53 cents US on Monday.

Some warned a potential blanket tariff would also be bad for businesses on the U.S. side of the border.

鈥淔or the American businesses and for American consumers, this would mean higher prices and increased costs for input and less competitive business environment for America as well,鈥� the Canadian Chamber of Commerce鈥檚 chief economist, Stephen Tapp, said in an interview late Monday.

Things would be even worse if other countries retaliated with tariff walls of their own. In that case, Canadian incomes would fall by 1.5 per cent and productivity by 1.6 per cent, the chamber鈥檚 report said.

Tapp said in this case it would amount to USD $2,000 less in purchasing power for the American consumer. The numbers are even higher with a 25 per cent tariff.

He suspects that increased cost would not be appreciated in a U.S. that voted for Trump鈥檚 promises of reducing inflation and the cost of living.

鈥淐onsumers that have just gone through the pandemic and large inflation, then difficult times for Americans and Canadians, I think they would really not be happy to see prices go up and the sticker shock that they would feel after prices came in.鈥�

A joint statement from Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic LeBlanc said Ottawa will continue to discuss border security issues with the incoming administration.

Even the threat of tariffs is bad for investment in Canadian business, Tapp said.

鈥淚t would be bad for overall sentiment in Canada for the consumer side,鈥� he said.

Trump鈥檚 first tenure in the White House did show that Canadian businesses are resilient, Tapp said. They should prepare for a rush of orders before any tariffs come into play while also bracing for uncertainty and chaos in the four years that follow.

鈥淲e saw that we should take Trump seriously.鈥�