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In the midst of ongoing NAFTA negotiations, U.S. President Donald Trump dropped a potentially devastating bombshell: he wants to impose big tariffs on aluminum and steel.

• Trump's tariffs could jack up cost of beer, trucks for consumers

His remarks Thursday came as a surprise to industry stakeholders in the U.S. and abroad, some of whom were gathered in Mexico City for the seventh round of NAFTA talks.

But Trump’s big news was slim on specifics and it’s unclear whether Canada will be granted an exception to the potential tariffs. Trump suggested a 25 per cent tariff on steel and a 10 per cent tariff on aluminum, and said more details will be released next week.

In hopes of clearing up the murky announcement, Â鶹ӰÊÓ Channel spoke with Marvin Ryder, an assistant professor at the McMaster University DeGroote School of Business, to discuss Trump’s unexpected tax and its potential repercussions for Canadians.

First off, does Trump have the power to single-handedly order a tariff?

It’s unusual that a president talks about doing tariffs, that’s not actually part of his job description. That’s really what Congress does. But there is one exemption, and that is when you have national security issues. So this is the way Donald is framing this -- that steel and aluminum are national security issues for the United States and therefore they have to take these tariffs.

Will Canada be targeted?

Now I think he’s going after … China, possibly Russia, and even possibly Indian steel and aluminum makers, and therefore I think it’s likely we’re going to get an exemption. I’m buoyed by the fact that the Secretary of Defence, former General (Jim) Mattis, actually said he views Canadian steel and aluminum as a strategic asset of the Armed Forces in the United States. That’s why I think we’re likely going to get an exemption.

But what happens if Canada doesn’t get an exception?

Well, first thing people need to remember, of course, is we don’t pay a tariff, it’s only the buyer who pays the tariff. But that, in essence, makes Canadian (aluminum and steel) still more expensive than the American market. For steel specifically, we have a great market with the automobile makers. Same thing with aluminum -- automobile makers use it, but there are that use aluminum to make our products more expensive, that’s a concern.

If Trump targets Canada, what should Ottawa do?

Now, if they do slap one on, I think we do what Mexico has already announced today: you put an embargo on us, we’re going to put tariffs on you, tit for tat. I haven’t seen a trade war like this since the 1960s break out. I hope Donald knows what he’s doing.

What is Trump’s strategy here?

Donald plays to his base. His base is the Rust Belt -- we’ve got to make America strong again, we’ve got to protect those workers and try to bring those American jobs back. I think he falsely thinks that these tariffs are actually going to help.

In fact, tariffs often make domestic companies less able to compete in international markets. It doesn’t encourage efficiency, it doesn’t encourage the kind of investments, because it gives them a false sense of superiority in the marketplace. Also, because he’s going to tax some of these things, if you need Canadian steel to do something, if you need Canadian aluminum, it makes it more expensive. And probably the consumer pays the cost of this, not the workers or the company back in the other country.

There are other ways to do this, and I just think he’s playing to his base. He’s not deciding good economic policy.

According to Foreign Affairs Minister Chrystia Freeland, Canada is the biggest buyer of American aluminum and steel. Could Trump’s move be bad for the U.S.?

This is going on as round seven of NAFTA is being discussed in Mexico City. That negotiation doesn’t end until sometime next week. So (while) this drama is playing out, I could see, for instance, somebody march out of those talks over this. I could see Canada put some retaliatory tariffs on American steel. You want to play tough? We’ll play tough.

Should Canadians be worried?

Now look, I don’t want people to get ahead of themselves. The announcement today was about an announcement next week, and (Trump) promises the details next week. So I don’t want to get ahead of ourselves, I think we’re going to be most-favoured nation status, and therefore be exempt, and therefore we don’t need to play the what-if scenarios.

But, if he wants a war, we’re ready to give him one.