An equity strategist says U.S. President-elect Donald Trump’s threat to impose sweeping tariffs on goods from Canada on his first day in office next month would hurt American consumers immediately and is unlikely to be implemented without major carve-outs.

“The way I think about (Trump) is that he should be taken seriously, but not literally,” Ian de Verteuil, equity strategist at CIBC Capital Markets, said in an interview with BNN Bloomberg on Wednesday.

“Historically he is quite extreme and uses a lot of rhetoric, but at the end of the day we have to think about what he is trying to achieve and let’s go back to the basic principles: MAGA.”

He said Trump’s “Make America Great Again” (MAGA) slogan would be put to the test if Trump followed through on his threat to impose a 25 percent tariff on Mexican and Canadian goods entering the U.S. unless both countries address the new president’s border concerns.

“The concept of a blanket 25 percent tariff on everything from fossil fuels to auto parts to a variety of similar things would, in my opinion, have an almost immediate negative impact on the U.S. consumer,” he said.

“So I think that’s unlikely, but let’s be clear; We predict what a relatively capricious new US president will do, but are confident that the impact will be less than the market currently expects.”

His assumption, de Verteuil said, is that the U.S. tariffs, whatever form they ultimately take, would not apply to Canadian fossil fuel auto parts imported into the U.S. because the American economy still relies heavily on them dependent on imports.

But companies that export discretionary items to the U.S., such as apparel maker Gildan Activewear Inc. or powersports vehicle maker BRP Inc., are more at risk, he said.

He added that he believes Mexico-based companies that export goods to the U.S. are at greater risk of being negatively impacted by tariffs than Canadian companies because Trump’s border concerns primarily affect the U.S.’s southern neighbor.

“Ultimately it is not about Canada, but above all about Mexico, for three reasons,” explained de Verteuil.

“Firstly, it concerns immigration that occurs across the border from Mexico to the USA, secondly, the transport of drugs from Mexico to the USA and thirdly, massive investments by Chinese companies in Mexico under the pretext that the products instead flow to the south flow to the north.”

He said the U.S. has “far fewer” problems with its northern border when it comes to immigration and trade, but also acknowledged that there currently appears to be “some animosity” between Trump and Justin Trudeau’s Liberal government.

“While it looks like there are some issues with that, I would say overall that Canada has been a great trading partner for the U.S.,” he said.

“We are not immune, but I would say the likelihood of us having major problems in 2025 is quite low.”