Canada would emerge from a trade war with much deeper scars than the US should it retaliate against Donald Trump’s potential tariffs, economist David Rosenberg said.
The founder of Toronto-based Rosenberg Research & Associates Inc. said the Canadian government’s plan for “tit-for-tat” counter-tariffs would backfire. Canada exports more than 20% of its gross domestic product to the US, while the US sends only 1.2% of GDP to its northern neighbour, he said in a Monday morning note to clients.
“There are times when it pays to just take the lumps and move on — I’m not sure getting into a full-blown trade war, no matter who started it, will make Canadians better off in the end,” Rosenberg wrote.
Officials told Bloomberg News last week the government plans to retaliate with tariffs only if the US administration moves first.
A report in the Wall Street Journal said Trump is planning to issue a broad memo that instructs US federal agencies to examine the country’s trade relationships — singling out China, Canada and Mexico. But the new administration will stop short of imposing tariffs on his first day in office, the Journal said.
The Canadian dollar surged more than 1% on the Journal story, trading at C$1.4324 per US dollar as of 9:37 a.m. Toronto time.