TORONTO (AP) — Canadian Prime Minister Justin Trudeau said Friday that if President-elect Donald Trump follows through on this threat to impose sweeping tariffs on Canadian products, he would be raising prices for Americans and hurting American businesses.

Trump has threatened to impose tariffs on products from Canada and Mexico if the countries don’t stop what he called the flow of drugs and migrants across southern and northern borders. He said he would impose a 25% tax on all products entering the U.S. from Canada and Mexico as one of his first executive orders.

“It is important to understand that Donald Trump, when he makes statements like that, he plans on carrying them out. There’s no question about it,” Trudeau said to reporters in Prince Edward Island in Atlantic Canada.

“Our responsibility is to point out that he would not just be harming Canadians, who work so well with the United States, but he would actually be raising prices for Americans citizens as well and hurting American industry and business,” he added.

Trudeau said Trump got elected because he promised to bring down the cost of groceries but now he’s talking about adding 25% to the cost of all kinds of products including potatoes from Prince Edward Island.

Those tariffs could essentially blow up the North American trade pact that Trump’s team negotiated during his initial term. Trudeau noted they were able to successfully re-negotiate the deal, which he calls a “win win” for both countries.

“We can work together as we did previously,” Trudeau said.

Trump made the tariff threat Monday while railing against an influx of illegal migrants, even though the numbers at the Canadian border pale in comparison to the southern border.

The U.S. Border Patrol made 56,530 arrests at the Mexican border in October alone — and 23,721 arrests at the Canadian one between October 2023 and September 2024.

Trump also railed about fentanyl from Mexico and Canada, even though seizures from the Canadian border are few in comparison to the Mexican border. U.S. customs agents seized 43 pounds of fentanyl at the Canadian border last fiscal year, compared with 21,100 pounds at the Mexican border.

Canadian officials say lumping Canada in with Mexico is unfair but say they are ready to make new investments in border security.

“We’re going to work together to meet some of the concerns,” Trudeau said. “But ultimately it is through lots of real constructive conversations with President Trump that I am going to have, that will keep us moving forward on the right track for all Canadians.”

Mexican President Claudia Sheinbaum said Thursday she is confident that a tariff war with the United States will be averted. Trump posted on social media that he had spoken with her and she had agreed to stop unauthorized migration across the border into the United States.

When Trump imposed higher tariffs during his first term in office, other countries responded with retaliatory tariffs of their own. Canada, for instance, announced billions of new duties in 2018 against the U.S. in a tit-for-tat response to new taxes on Canadian steel and aluminum.

Canada is already examining possible retaliatory tariffs on certain items from the U.S. should Trump follow through on his threat to impose sweeping tariffs on Canadian products, a senior official told The Associated Press this week.

A government official said Canada is preparing for every eventuality and has started thinking about what items to target with tariffs in retaliation. The official stressed no decision has been made. The person spoke on condition of anonymity as they were not authorized to speak publicly.

In the U.S., business groups were quick to warn about rapidly escalating inflation. House Democrats put together legislation to strip a president’s ability to unilaterally apply tariffs this drastic, warning that they would likely lead to higher prices for autos, shoes, housing and groceries.

Canada is the top export destination for 36 U.S. states. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day.

About 60% of U.S. crude oil imports are from Canada, and 85% of U.S. electricity imports are from Canada.

Canada is also the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for and investing in for national security.

Canada is one of the most trade-dependent countries in the world, and 77% of Canada’s exports go to the U.S.

“Canada has reason to fear because Trump is impulsive, often influenced by the last thing he sees on Fox News,” said Nelson Wiseman, professor emeritus at the University of Toronto. “He can leverage that by catering to what he thinks will sound and look good to the public rather than to what happens or will happen.”