President-elect Donald Trump and Canadian Prime Minister Justin Trudeau‘s meeting last week about planned tariffs on Canada was said to be productive, but it could put several Canadian sectors on high alert.

What Happened: Trudeau flew to Mar-a-Lago to meet with Trump, and the two political leaders ate dinner and discussed several key topics before Trump's January inauguration.

The meeting took place after Trump promised to impose 25% tariffs on Canada when he was sworn into office.

Trudeau told Trump the tariffs would hurt Canada's economy, according to sources at the dinner table, per Fox News.

The tariffs are being placed on Canada and Mexico due to illegal immigrants and illegal drugs flowing from those countries to the United States.

Sources said Trump was direct regarding his conversation with Trudeau, telling the Canadian leader that his country has failed to protect the border. Trump also wants to eliminate the trade deficit with Canada, estimated to be around $100 billion, according to the sources.

"So your country can't survive unless it's ripping off the US to the tune of $100 billion?" Trump reportedly said to Trudeau about the trade deficit.

The report said that if Canada can't survive with the requirements of protecting the border and fixing the trade deficit, Trump suggested that the neighboring country could become the 51st state instead.

Trudeau and others at the table nervously laughed at the suggestion, with Trump reportedly adding that the title of prime minister is better than governor. As the meeting concluded, talks between Trump and Trudeau were said to have been "very positive."

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Why It's Important: The report said Trump told Trudeau he expected changes to be made ahead of his January inauguration, or the tariffs would be placed on Canada on his first day in office.

A tariff on Canada could impact several sectors, including some of the top exporters to the United States. Crude oil, petroleum gas, vehicles, car parts, machinery, turbines, plastics, pharmaceuticals, metals and agricultural products are among the top exported items from Canada to America, as reported by the Washington Post.

Canada is the second-largest trade partner with the United States, with $418 billion in goods imported from Canada in 2023 and $354 billion in goods exported to the country.

Goldman Sachs economists predict that Canada's gross domestic product could decline by as much as 4% if Trump’s 25% tariff plan is enacted. The plan could also hurt the U.S. GDP, the analysis said.

"A large increase in tariffs on North American imports would entail significant economic costs, particularly for Canada and Mexico," Goldman Sachs economists said.

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