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Last month, U.S. president-elect Donald Trump announced he would impose a 25 per cent tariff on all Canadian imports until Ottawa is able to secure the border.
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If Trump makes good on the promise, it will have wide-ranging impacts on all aspects of the Canadian economy, from energy to autoparts.
Financial Post editor-in-chief Joe Hood and reporters Jordan Gowling and Meghan Potkins answered questions about Trump’s plan and its impact on Canadians during a live Q&A session on Dec. 5.
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What we know about Trump’s tariff threat
On Nov. 26, Trump posted on Truth Social that among his first duties when taking office on Jan. 20 will be to sign an executive order imposing a 25-per-cent tariff on all products coming into the United States from Canada and Mexico.
Trump said the tariff would remain in place until both countries stop the flow of drugs and immigration into the U.S.
In response, Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominic LeBlanc issued a statement indicating the government would discuss border security with the incoming U.S. administration.
Last week, Prime Minister Justin Trudeau flew to Florida for talks with Trump, but left with no assurances that Canada would receive carve-outs from the plan.
Exports to the U.S. are crucial for the Canadian economy, representing 77 per cent of the country’s overall exports and 60 per cent of its gross domestic product.
Economists have warned that the tariffs would drive the Canadian economy into a recession in 2025 and estimates show it could cost each Canadian between $1,000 and $2,000 annually.
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Pedro Antunes, chief economist at the Conference Board of Canada, warns the tariffs would “shut down the auto industry” in Canada if they were permanent.
When it comes to the loonie, Bipan Rai, managing director and head of ETF and structured solutions strategy at BMO Global Asset Management, believes much of the downward impact from tariffs is already priced in, so the Canadian dollar may not sink much further.
The tariffs also risk hurting Americans’ pocketbooks as well.
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Antunes warns they would bump up gas prices in the country, with Goldman Sachs Group Inc., predicting “significant consequences” to U.S. consumers if the tariffs are realized.
With files from Bloomberg, The Canadian Press and The Associated Press
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