The Trump tariffs are coming Monday and Canada simply isn’t ready.
We don’t know the full extent of the tariffs, such as whether there will be a carve out for oil, but barring a miracle, we should expect sweeping measures to be imposed on Canadian imports by early Monday afternoon.
We’ve all heard political leaders across the country and across the political spectrum say how devastating these tariffs will be to our economy.
The numbers that once sounded so great, now seem menacing. The United States is our biggest trading partner, the country we did $908 billion USD worth of trade with in 2022, the country we send more than 76% of our exports to.
Think about that last stat, 76% of all of our exports go to one country.
There is no way around it, we are dependent on the United States for our economic health. While our leaders are threatening to respond with counter tariffs, the impact of American tariffs on Canada will be far bigger than anything we could impose on them.
Just 17% of American exports headed to Canada in 2022. While the dollar value – $427 billion – was close to what we sold to them, the impact on our respective economies simply doesn’t compare.
When Trump’s tariffs come, once we know the full extent, there will need to be a response. At this point, the Trudeau government is planning a slow roll out of counter tariffs that will ramp up over time. The plan is to start with targeted products first, like Florida orange juice or Kentucky bourbon – products that we buy a lot of and that are produced in Republican held jurisdictions.
One move under consideration by the Doug Ford government in Ontario is to simply stop the purchasing of all American-made alcohol products from bourbon to California wine to Tito’s Handmade Vodka. Ontario’s government liquor store, the LCBO, is the biggest purchaser of beverage alcohol in the world and halting the import of all American products would definitely be noticed.
Noticed or not, it may not be enough to convince Trump that his tariffs should be removed.
When Trump first said that he would impose 25% tariffs on all Canadian products at the end of November, it came with a condition. He said that tariffs would be imposed unless we took action on our border regarding drugs and migrants.
That was actually an easy ask and something a competent government could deliver. Now, we don’t know what Trump wants.
He’s said repeatedly that he wants to make Canada the 51st state. That seemed like a joke at the start, something to troll Justin Trudeau with, but what if it’s not a joke anymore?
Handing Canada over to Trump is clearly not something that most Canadians want. An Ipsos poll released on Friday shows 80% of Canadians would never vote for Canada to become part of the United States.
Beyond that there is the fact that Trump and those around him believe in the value of tariffs and that they will help the American economy and American workers.
Most economists would argue that tariffs are harmful to trade, to workers and the economy. This is the message that all of our political leaders have been selling in their TV appearances, phone calls and meetings with American officials – and it it likely falling on deaf ears.
Trump believes tariffs are a valuable tool, not only for negotiations but for building up America’s manufacturing base.
There is no doubt the threat of tariffs is influencing the decisions of business executives making decisions on where to build their next plant. This has to be the long-term fear for the Canadian economy, that investment on this side of the border will dry up as companies look to ensure they are tariff-free inside the United States.
Everything is about to change on Monday as Trump brings in his version of a new world order.