U.S. President Donald Trump’s plan to hit Canada with an up to 25 per cent trade tariff on Feb. 1 boils down to a classic dealmaking tactic, according to the chief investment officer of one of Canada’s largest lenders. Bank of Montreal’s Sadiq Adatia predicts tariffs at that level are unlikely to last long, if they’re imposed at all.

“When you start any negotiation, you start off at a number you don’t think is feasible, just to scare people as a starting point,” he told Yahoo Finance Canada in an interview on Tuesday. “I don’t see 25 per cent sticking.”

Adatia predicts some form of tariff is likely, perhaps in the 10 per cent range.

Trump branded Canada “a very bad abuser” late Monday, complaining to reporters about the flow of fentanyl and migrants across the northern U.S. border in the Oval Office following his inauguration.

“I think we’ll do it Feb. 1,” Trump said, referring to the blanket 25 per cent tariff on imports from Canada and Mexico that he promised shortly after winning a second term in November.

Adatia believes Trump is aiming to quickly push Canada and Mexico to the bargaining table, while putting other foreign trade partners on notice for tough negotiations.

“I don’t think 25 per cent is really where he wants to go. I’m sure his own cabinet is telling him, ‘Canada is a great trading partner for us,’” Adatia said.

“He’s signalling, ‘this is what I’m doing to my good trading partners,’ so the rest of the world gets a little bit more scared.”

In his inauguration speech on Monday, Trump promised to usher in a “Golden Age of America,” backed by a new “External Revenue Service” for collecting tariffs, duties, and revenue from other countries. He has complained the U.S. subsidizes Canada to the tune of US$200 billion annually.

“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” Trump said.

On Tuesday, Prime Minister Justin Trudeau reiterated that his government is ready to respond to all scenarios if Trump imposes tariffs on Canada.

In Toronto, the S&P/TSX Composite index (^GSPTSE) was virtually flat in midday trading on Tuesday. Adatia says a weaker loonie is helping Canadian companies offset some of the risk posed by incoming U.S. tariffs. However, his recommendation for 2025 is to be overweight U.S. stocks.

“I still think Canada can do well, in particular if you look at other parts of the world. I think emerging markets are going to be impacted by their own economy, and then the additional impact of tariffs,” Adatia said.

“Canada sits to us as a neutral.”