U.S. President Donald Trump said on Monday that U.S. banks are not allowed to operate in Canada, echoing an earlier statement he'd made on his Truth Social platform — but the claim is false.

"American banks are not allowed to do business in Canada. Can you believe that?" he said to a room of reporters. Trump has mentioned Canada's banking sector several times recently in relation to trade tensions, suggesting that he has another bone to pick as a tariff dispute simmers between the two countries.

Several U.S. financial institutions have operations in Canada. They fall under the Schedule 2 category (foreign-owned banks with Canadian subsidiaries), and they include JPMorganChase, which has about 600 employees on this side of the border, and Citibank, which has operated in Canada for more than a century.

So what might the U.S. president be referring to? 

"It's somewhat exaggerated. [U.S.] banks can operate in Canada, but if they really want to be major players, it's a little more difficult," said Lawrence Kryzanowski, a professor of finance at Concordia University's John Molson School of Business.

Regulations, loyal clients dissuade U.S. banks

   A combination photo shows Canadian investment banks RBC, CIBC, BMO, TD and Scotiabank in Toronto, Ontario, Canada on March 16, 2017 and June 19, 2024. Canada's banking industry is highly concentrated, with its big six domestic banks — Royal Bank, Bank of Montreal, Scotiabank, CIBC, TD Bank and National Bank — accounting for the vast majority of total bank assets. (Chris Helgren/Blair Gable/Reuters)

Foreign banks might not want to move into Canada because of tough competition. Canada's banking industry is highly concentrated, with its big six domestic banks — Royal Bank, Bank of Montreal, Scotiabank, CIBC, TD Bank and National Bank — accounting for the vast majority of total bank assets.

The Big Six already have an extensive and entrenched network of loyal clients in the domestic market, which makes it harder for foreign banks to get a foothold here: "It's not a very exciting market for a large U.S. bank," said Kryzanowski.

"If a foreign bank goes in and they want to set up a network, they have to get a lot of retail customers to switch."

Canada's Big Six fall under the Schedule 1 category — meaning they must be Canadian-owned institutions that take deposits. Any American bank that wanted to buy a major Canadian bank would face these and other restrictions.

Even smaller Schedule 1 banks face ownership limits, said Kryzanowski, because 35 per cent of the bank has to be publicly owned. "Typically, if an American bank is going to move into Canada, they want to have complete control."

There are arguments to be made for and against the Canadian banking's strict regulatory environment, he added.

Canadian banks known for stability

The regulations make it difficult for foreign competition to compete here, but they've also given Canadian banks a reputation for stability.

"The big difference between Canadian bank requirements and U.S. bank requirement is the domestic stability buffer," said Jie Zhang, a finance professor at Trent University in Peterborough, Ont.

That buffer — a kind of fund that Canadian banks must set aside in case of financial emergencies — helped our banking institutions stave off the worst pains of the 2008 financial crisis and the COVID-19 pandemic, according to Zhang.

Canadians banks are required to set aside a larger percentage of these funds than U.S. banks do, and those compliance costs could be another factor that dissuades American-owned banks from operating in Canada.

The Canadian Bankers Association refuted Trump's claim on Monday, noting in a statement that there are 16 U.S.-based bank subsidiaries and branches holding about $113 billion in assets currently operating in Canada.

"Canada has a strong and competitive banking sector comprised of both domestic and foreign banks," reads a post on the association's X account. "These banks specialize in a range of financial services, including corporate and commercial lending, treasury services, credit card products, investment banking and mortgage financing.

"They serve not only customers with cross-border business activities, but also Canada's domestic retail market. U.S. banks now make up approximately half of all foreign bank assets in Canada."

"We wouldn't want to destabilize the economy more than these tariffs have already done," she said.

University of New Brunswick economist Herb Emery said consumers will be hit as well because the U.S. move would drive down the value of the Canadian dollar, making U.S. products more expensive here.

"If we throw a tariff on top of that, we'll potentially have more cost going on consumers," he said.

Canadian products "are still going to be more expensive than the American products they'll replace, because if they weren't, we would have gone to them already."

The Atlantica Centre for Energy said Monday that New England buys $10.2 billion worth of fuel oil, natural gas and electricity imported to the region from Canada each year, all of it now subject to a 10-per-cent Trump tariff.

New Brunswick is the primary source of electricity in northern Maine, eight in 10 cars in New England use gasoline from Canada and 90 per cent of jet fuel at Boston's Logan Airport is from Canada, the research institute said. 

"We all must raise our voices in opposition of a trade war between two countries that have historically had the best trading relationship in the world," said board chair Stephen MacMackin.

Irving Oil did not respond to an interview request, but a professor in New Hampshire said the company had already increased customers' bills for home heating oil. (Carl Mondello/Radio-Canada)

Irving Oil did not respond to a request for comment Monday. Eighty per cent of products from the company's Saint John refinery are exported to the U.S.

A professor at Dartmouth College in New Hampshire said on social media Sunday that Irving Energy, the company's New England retailer, was adding the 10 per cent tariff on Canadian home heating fuel to customers' bills.

"If there is any doubt that tariffs are passed through to consumers, the cost of propane to heat my house just went up by the amount of the tariff," Douglas Irwin wrote.

Holiday in this country, Holt says

Holt urged New Brunswickers to consider vacationing in places other than the United States this year if the tariffs came into effect.

"We would love to see New Brunswickers supporting New Brunswick and Canada at a time like this," she said.

A poll by Narrative Research taken last week, before Trump announced the tariffs on Saturday, found that almost two-thirds of respondents in the Maritimes — 62 per cent — planned to travel less often to the U.S. because of Trump's presidency.

Three per cent of those surveyed said they would travel to the U.S. more, and 26 per cent said their travel frequency wouldn't change. 

Holt said she believes a strong buy-local sentiment in response to the tariffs "comes alongside a bit of an anti-American sentiment, a frustration, that our closest neighbour and trading partner has decided to treat us this way."

New Brunswick Premier Susan Holt says the tariff threat from the United States has created uncertainty for business and been a wake-up call for the country.

"We have been so dependent on what has been a really integrated and close economic relationship with the U.S.," she told Information Morning Fredericton.

New Brunswick and the rest of Canada had been preparing for the tariffs, which would have added 25 per cent to the cost of most Canadian products crossing the border into the U.S. starting at midnight Tuesday.

But late Monday, Prime Minister Justin Trudeau announced U.S. President Donald Trump was delaying the tariffs by 30 days.

Late Monday, Prime Minister Justin Trudeau announced U.S. President Donald Trump would delay the tariffs by 30 days. (Patrick Doyle/Reuters, Nathan Howard/Reuters)

In New Brunswick, this meant a late change to allow U.S. products to remain on N.B. Liquor store shelves, although the Crown corporation won't be buying any new liquor products from the U.S. for now.

Holt said it is important to use the 30-day pause to be aggressive about removing internal trade barriers and getting all premiers at the table together.

The delay should be used to get creative about new markets and finding ways to work together as Atlantic provinces or within sectors, she said.

Trump's long-talked-about promise of tariffs is having an impact on businesses, Holt said.

"Ever since Trump said the word tariffs back in November, businesses have paused their investments, their expansion plans, their hiring because of the significant uncertainty that that introduced into the economy," she said.

It's only gotten worse with the changing start dates for the threatened tariffs, she said.

"That kind of environment just really prohibits making big and bold investments in your business when you don't know whether your biggest customer is going to be stable or not, and what prices you'll be facing there."

Gary Keenan, the president of K-Line Construction in Woodstock, said concern is high among his employees at K-Line.

"You know, 'Will we have a job?,'" Keenan said. "Will there be cuts in numbers? Will there be cuts in pay?' And we don't have any answers for those."  

Keenan said his business does a lot of post-storm restoration, not just in the Maritimes, but also in the United States, so he worries about how the hurdles his business has cleared for border crossings would be affected. 

And, he said K-Line is also involved in highway construction, signing and lighting, with most materials coming from the U.S

"I've seen hard times in my 45 years of business, a lot of economic challenges, but not outright economic warfare," Keenan said.

"We're going to give it our all, because we didn't start out without understanding that there would be challenges, and we've dealt with them as they come head on, and we'll continue to do it.

"But I really don't know, I don't know how to fight this fight."

Holt said that with the threat of tariffs still looming, it's difficult to build a budget based on a forecast economic growth.

"We usually look to a whole team of forecasters … we usually take an average of all of their projections," Holt said.

"But given the volatility and the significant impact that the threat of tariffs has had on those projections, not knowing whether there will be tariffs in place means we're talking a significant percentage of GDP swing that dramatically affects the top line for budget for the province.

"So it's a really challenging situation."

U.S. President Donald Trump threatened Iran, floated the idea of deporting U.S. citizens convicted of crimes and said Palestinians may have no alternative but to leave Gaza in wide-ranging comments to reporters at the White House on Tuesday.

On Iran, Trump said he's told his advisers to obliterate the country if it assassinates him.

"If they did that, they would be obliterated," he said while signing an executive order calling for the U.S. government to impose maximum pressure on Tehran. "There won't be anything left."

The Justice Department filed federal charges in November over an alleged Iranian plot to kill Trump before the presidential election.

The department alleged Iranian officials had instructed Farhad Shakeri, 51, in September to focus on surveilling and ultimately assassinating Trump. Shakeri is still at large in Iran.

Mulls deportation of U.S. prisoners

On the issue of U.S. prisoners, Trump said he is studying the legality of sending dangerous offenders to prisons in other countries.

"If we had the legal right to do it, I'd do it in a heartbeat," he said. "I don't know that we do. We're looking at it right now."

Trump didn't say which countries might take U.S. prisoners.

But his comments come after Secretary of State Marco Rubio said El Salvador had offered to jail some violent American criminals and that the offer was "very generous"— even though it raised some legal concerns.

Proposes permanent displacement of Palestinians

On Gaza, Trump reiterated on Tuesday his call for Palestinians to "permanently" leave the enclave, which he described as a "demolition site" following Israel's war with Hamas militants.

"I don't think people should be going back to Gaza," Trump said, sitting in the Oval Office with Israeli Prime Minister Benjamin Netanyahu.

"You can't live in Gaza right now. I think we need another location," Trump said.

 

Thousands of Palestinians return to destroyed homes in northern Gaza

 

Israel removed its blockades of northern Gaza, allowing thousands of Palestinians to return to their communities — even if their homes were destroyed. Meanwhile, families in Israel are waiting for word about if, and when, hostages will be released.

"I think it should be a location that's going to make people happy. You look over the decades, it's all death in Gaza. This has been happening for years. It's all death. If we can get a beautiful area to resettle people, permanently, in nice homes where they can be happy and not be shot and not be killed and not be knifed to death like what's happening in Gaza."

Trump has called on Jordan, Egypt and other Arab countries to take in Palestinians from Gaza temporarily while reconstruction takes place in the enclave after the devastating war between Hamas and Israel. His call Tuesday was the first time he has publicly floated making that resettlement permanent.

"I hope that we could do something where they wouldn't want to go back," Trump said. "Who would want to go back? They've experienced nothing but death and destruction."

Trump's remarks echo the wishes of Israel's far right and contradict former president Joe Biden's commitment against mass displacement of Palestinians.

Arab states and the Palestinian Authority have rejected the idea, which some human rights advocates have likened to ethnic cleansing.

Palestinians claim Gaza as part of a future homeland, and many have indicated a desire to remain and rebuild.

Finance Minister Dominic LeBlanc has asked his fellow ministers to draw up a list of ideas he can deploy in the planned spring budget to fight back against U.S. protectionism, a threat that shows no signs of going away even if Canada has secured a pause to President Donald Trump's planned tariffs.

In an undated, confidential memo sent to cabinet ministers and obtained by CBC News, LeBlanc writes he is only willing to consider spending more money on initiatives that respond to the "current Canada-U.S. context" and those that "strengthen our national unity."

He's also open to projects that make life more affordable for Canadians or those that spur the country's growth, competitiveness and productivity.

"Team Canada must be ready to respond to the threat of unprecedented tariffs from the new U.S. administration and mitigate their impacts on the Canadian economy," LeBlanc wrote.

"We are at a crucial moment for our government and for our country."

While Canada got a reprieve Monday when Trump agreed to pause his promised 25 per cent tariff on virtually all of our goods, that's likely not the last the country has seen of the unpredictable president.

Trump said in a social media post that the pause was just an "initial outcome" and he's still looking for some sort of "final economic deal" with the country down the line.

Trump grants last-minute delay on tariffs for Canada

There is a possibility Trump drops the push for a 25 per cent tariff and goes ahead instead with a 10 per cent universal tariff on goods from all countries after his administration wraps up a study on global trade in April. 

Even a 10 per cent levy would be hugely disruptive to Canada given just how intertwined the two economies are after decades of liberalized trade.

There's also a possibility LeBlanc never tables a federal budget. Prime Minister Justin Trudeau is set to step down after the party picks his replacement on March 9.

The next prime minister may choose to go to an election right away rather than test the confidence of the House of Commons when it's scheduled to return on March 24. The federal budget is typically tabled sometime in April.

Still, LeBlanc told his fellow ministers that, if he's writing the next budget, it will be laser-focused on responding to expected "trade disruptions" and how the government can "provide temporary support" to impacted workers and businesses.

LeBlanc asked ministers to submit "no more than three priority funding proposals" to the Finance Department by Feb. 2 — a deadline that has already passed and one that fell before Trump's threatened tariffs were set to take effect.

He also mentions the most recent cabinet retreat, which suggests this letter was written sometime at the end of January.

That means ministers had only days to put forward concrete proposals to help the country weather the expected fiscal and economic storm with Trump back in the White House.

"Our focus is on advancing and defending Canadian interests. Therefore, I am relying on each of you to think of our collective needs, beyond the interests of your ministries, and be disciplined in putting forward items for consideration," the memo reads.

The Globe and Mail was first to report on LeBlanc's memo. 

LeBlanc also said in the "current fiscal climate, it is more important than ever to focus on no-cost approaches," like cutting red tape, removing barriers to internal trade and investment and "streamlining government processes."

Meanwhile, the Conservatives are renewing their push to get the federal Liberal government to recall Parliament right away even if there's a Liberal leadership race underway to pick Trudeau's replacement.

"Canada is facing a crisis, but the Liberal Party has shut down our Parliament. President Trump has put a 28-day pause on his tariffs, but nothing can be taken for granted. There is no time for rest. Canada must take back control of our border, strengthen our economy and put Canada First," the party said in a news release on Monday.

Under Canadian trade law, the government can impose retaliatory tariffs on the U.S. without Parliament's approval.

The government also maintains the federal cabinet can roll out parts of an aid package for workers and businesses — if it comes to that — without MPs.

Still, the Conservatives say they want to have a say "debating and considering responses" to Trump's threats.

Speaking of American public opinion, it's sympathetic to Canada on tariffs. Different surveys show only minority support for these tariffs, even when the survey includes China.

American media and the stock markets appeared stunned at the imminent threat.

It was the lead item on several U.S. newscasts Monday, generating 11 minutes on NBC's Today Show, and producing above-the-fold stories in The New York Times, Washington Post and Wall Street Journal.

All this in a country that, to put it mildly, has lots of other major things going on in the two weeks since Trump was inaugurated.

With Trump enjoying a mini-honeymoon in public opinion, CNN's polling analyst said this might be his first major unpopular move.

"Trump has done some fairly popular things in his first weeks in office. This is not one of them — no, no, no. Horrible, horrible, horrible," Harry Enten said, of big tariffs on Canada and Mexico.

The market sends a message

More importantly, Americans took notice. This was not a given. Americans tend to pay as much attention to international trade as Canadians do to NCAA football, maybe less.

And it's maybe understandable because trade represents a far smaller share of the economy in the U.S. than Canada, where trade spats are often a top story.

Yet, this week, Google searches for tariffs soared to historic highs in the U.S. 

"You know folks are paying attention when there are more Google searches for that than for Taylor Swift," Enten said. "I never thought I'd see it happen, but the American people are actually interested in tariffs."

So is the stock market, it turns out.

There was no telling how the market would react, and whether tariff news would reverse the generally buoyant mood on Wall Street in recent months.

Some analysts have opined that this — the market reaction — is the only guardrail against Trump. Because it's unlikely the courts or Congress would stop his tariffs.

It turns out the Dow Jones had dropped about two points since the moment last Friday afternoon when Trump promised tariffs were coming — a half-point Friday, and three times more on Monday morning.

Word about the tariff pause emerged, initially with Mexico, and immediately sent markets rebounding and restored hundreds of billions in stock value.

That's another positive takeaway from this episode, said one Canadian involved.

"We went to the brink, and we learned a few things," said Flavio Volpe, head of Canada's auto-parts lobby and a member of Prime Minister Justin Trudeau's Council on Canada-U.S. Relations.

"The tariff plan was not taken well by capital markets. Before that it was theory." 

He says it's now clear the markets will punish tariffs across North America. It's also clear that Canada might also get some support from important voices.

Volpe mentioned, specifically, veteran Iowa Sen. Chuck Grassley, who pleaded for exemptions to potash, which he noted would be horrible for farmers in his state of Iowa; even the U.S. manufacturers' lobby opposed the broad tariff.

Trump professed to be unaware of the market gyrations, when he saw reporters in the Oval Office Monday. 

"How is the market doing?" the president asked. 

"I don't know," he added. "I don't think about it."

He might have been bluffing. Or maybe not. Welcome to our new reality, where we'll be asking ourselves that question again and again, starting, perhaps, in about 30 days.