06:36 AM EST, 11/27/2024 (MT Newswires) -- Bank of Montreal (BMO) said it knew there would be a lot of barking on the trade front since the United States election, and President-elect Donald Trump's 25% tariff threat of Monday was loud and aggressive.

According to the bank, the question is: for Canada, will there be bite?

At the industry level, energy exports were C$173 billion in the last

12 months, or nearly a third of Canadian goods exports to the US.

That is the largest share of exports by a wide margin, pointed out BMO.

However, one has to question the legitimacy of tariff threats on Canadian energy, when there are few obvious near-term alternatives to more than three million barrels per day of imports on the US side, stated the bank. The immediate impact would be higher oil and consumer gas prices.

Meantime, industrial, manufacturing and other resource exporters

would be hit hard, in some cases through margin compression as

Canadian firms are forced to absorb some of the impact, added BMO.

Autos are another difficult case where various parts cross the border

multiple times before ending up in a finished product. There would

be some pushback at the industry level in some of these cases.

Ultimately, these factors should water down the threat of a steep

across-the-board tariff on all products, added the bank.

However, as a small open economy with tight trade ties to the US, Canada should be on "high alert," according to BMO.