Canada weighing how to retaliate if Trump imposes 25% tariffs
Experts say one Tariff salvo The trade dispute between the United States and Canada could plunge both countries into recession and severely disrupt cross-border trade between major trading partners.
Canada is exploring retaliatory tariffs on certain U.S. imports after President-elect Donald Trump threatened to do so on Monday, a Canadian government official said on Wednesday. 25% tariff on all goods From Canada and Mexico on day one. The official stressed that no final decision had been made, but spoke on condition of anonymity because he was not authorized to speak publicly.
Mexican President Claudia Scheinbaum also hinted earlier this week that the country Can take revenge Confront the United States by imposing tariffs on American products. Trump said the tougher tariffs were necessary to curb the flow of undocumented immigrants and illegal drugs from Mexico and Canada.
Economist Michael Davenport said: “U.S. President-elect Donald Trump earlier this week threatened to impose 25 per cent tariffs on Canada, which would push Canada into recession in 2025 and lead to inflation. sharp rise and force the Bank of Canada to raise interest rates next year,” Oxford Economics said in a report on Thursday.
The investment research firm said Canada’s inflation rate will reach 7 per cent by mid-2025, while unemployment will be close to 8 per cent by the end of the year. He added that the country’s automotive, energy and heavy manufacturing industries, which rely on exports to the U.S., would be hardest hit, noting that these industries also rely on U.S. suppliers for components.
When Trump imposed tariffs on the country’s steel and aluminum exports to the United States during his first term in the White House, Canada responded with tariffs. The U.S. products targeted by Canada include whiskey and yogurt, much of which comes from a factory in Wisconsin, the home state of then-House Speaker Paul Ryan.
Canadian officials said it was unfair to conflate Canada with Mexico but said they were prepared to make new investments in border security and work with the Trump administration to reduce the number of people arriving from Canada. Canadians are also worried about an influx of immigrants if Trump implements a mass deportation plan.
America will feel the pain too
Trump and his allies, including his choice for Treasury secretary, Scott Bessant, said the tariffs implemented during his first term advanced U.S. economic goals, including increasing federal revenue, and does not push up inflation.
But the United States may not emerge unscathed from an all-out trade war with Canada. Oxford University says sweeping tariffs on U.S. products could lead to a “shallow” U.S. recession and undermine political relations among allies.
Although the United States is the world’s largest oil producer, Canada supplies about 20% of the oil used domestically. As a result, U.S. natural gas prices could spike as high as 30 to 40 cents a gallon shortly after Trump imposes tariffs on Canada, and possibly as high as 70 cents.
With so much at stake, the incoming Trump administration is more likely to impose limited tariffs on Canadian products, such as steel, lumber and agricultural products such as dairy.
Davenport said: “Despite Trump’s latest threat to impose sweeping tariffs, we continue to believe that the Trump administration is unlikely to impose tariffs on Canadian auto and energy exports, which account for approximately 40% of Canada’s total exports to the United States. “The North American energy industry and automotive supply chain are highly integrated across the U.S.-Canada border, and any tariffs on these goods would also have a significant negative impact on the U.S. economy.”
contributed to this report.
