Trump's 25% Tariff Threat To Canada
December 1, 2024•560 words
"Tariffs that save jobs in the steel industry mean higher steel prices, which in turn means fewer sales of American steel products around the world and losses of far more jobs than are saved." ~ Thomas Sowell
"The benefits of a tariff are visible. Union workers can see they are "protected". The harm which a tariff does is invisible. It's spread widely. There are people that don't have jobs because of tariffs but they don't know it." ~ Milton Friedman
"Any time you read that your government is erecting tariff barriers, supporting threatened industries with subsidies, or interfering in any way with free trade between individuals or nations, you must realize that your standard of living is being lowered as a result." ~ John Pugsley
"A protective tariff is a typical conspiracy in restraint of trade." ~ Thorstein Veblen
Imagine this economic nightmare, a 25% tariff slapped on all Canadian goods entering the U.S.
This will send shockwaves through Canada’s economy, and you’d will likely feel the effects in your own life.
First off, Canada’s economy would take a hit, shrinking by around 3% each year.
That’s like losing $2,000 per person annually. Why? Because the U.S. is Canada’s biggest trading partner, and 75% of Canada’s exports go there. A tariff like this would make Canadian goods way more expensive in the U.S., cutting demand and slashing exports.
Industries like manufacturing and natural resources such as cars, oil, lumber, and metals would be hit the hardest.
Businesses would struggle with higher costs, job losses and much higher unemployment across the nation would follow, especially in places like Ontario and Alberta. Supply chains that connect Canadian and American industries, especially in cars and energy, would get tangled, driving up prices for both countries.
For you, that could mean higher prices on things like groceries, electronics, and imported goods.
Inflation could creep up, especially with the Canadian dollar weakens because of lost export revenues. If Canada retaliates with its own tariffs, this could spark a trade war, making everyday life even more expensive. In fact, the Canadian economy could go into a deep recession.
Diplomatic ties with the U.S. would also suffer.
Decades of cooperation through agreements like NAFTA or USMCA could be undermined. Negotiations between the Canadian liberal party with Trudeau and the Republican Trump party to fix things wouldn’t be easy and might drag on for years.
But it’s not all doom and gloom. Canada might take this as a wake-up call to look beyond the U.S. for trade. Deals with the EU, Asia, and other countries could reduce reliance on American markets, though it’d take time and effort to make those connections pay off. The Canadian economy needs to diverse itself with different trading blocks.
Canadian industries could use this crisis to innovate and explore new markets, becoming more resilient.
Domestic manufacturing might grow, creating jobs and strengthening the local economy. This might be being over optimistic and wishful thinking.
Still, navigating this kind of economic storm would require smart leadership that the Trudeau government doesn't possess. Canada needs to protect its workers, support struggling industries, and push for fairer trade terms with the U.S.