Business and political leaders in Canada say there will be pain if Donald Trump follows through on his pledge to impose a 25 per cent tariff on all Canadian goods, but they note the damage will be done at home, too.
The president-elect announced to Truth Social on Monday that he will sign an executive order imposing a 25 percent tariff on all products coming into the United States from Canada and Mexico.
He said the tariffs will remain in place until both countries stop drugs, especially fentanyl, and prevent people from crossing borders illegally.
Beth Burke, CEO of the Canada-US Business Council, said in a statement last night that Trump’s proposal would hurt businesses on both sides of the border and would “undermine the economic and geopolitical power of North America.”
Ontario Premier Doug Ford posted on social media that a 25 per cent tariff would be devastating to workers and jobs in both Canada and the United States.
Quebec Premier Francois Legault tweeted that everything must be done to avoid tariffs, and British Columbia Premier David Eby said Trump’s tariffs “will hurt Canadians and Americans alike.”
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“Canadians must stand united. “Ottawa must respond forcefully.”
Alberta Premier Danielle Smith said in a social media post that the Trump administration has “legitimate concerns regarding illegal activities” at the border. But she noted that the vast majority of her district’s energy exports to the United States are “delivered through safe and secure pipelines” which she said “in no way contribute to these illegal activities.”
Models developed by the Canadian Chamber of Commerce indicate that imposing a blanket tariff of 10 per cent would reduce the size of the Canadian economy by between 0.9 and 1 per cent, resulting in economic costs of about $30 billion annually.
It is estimated that the United States will see about $125 billion annually in economic costs.
“For American businesses and American consumers, this means higher prices, higher input costs and a less competitive business environment for America as well,” Stephen Tapp, the chamber’s chief economist, said in an interview late Monday.
Things will get worse if other countries respond with tariff walls of their own. In this case, Canadian income would decline by 1.5 per cent and productivity by 1.6 per cent, the chamber report said.
In this case, Tapp said, the purchasing power of the American consumer would decrease by $2,000. The numbers are even higher with customs duties of 25 percent.
He suspects the cost increase will not be appreciated in a United States that voted for Trump’s promises to lower inflation and the cost of living.
“Consumers who have just gone through the pandemic and the big inflation, and then the tough times for Americans and Canadians, I think they’re not going to be really happy to see prices go up and the shock that they’re going to feel after prices come in.”
A joint statement by Deputy Prime Minister Chrystia Freeland and Public Safety Minister Dominique LeBlanc said Ottawa will continue to discuss border security issues with the incoming administration.
Even the threat of tariffs hurts investment in Canadian businesses, Tabb said.
“It would be bad for overall sentiment in Canada on the consumer side,” he said.
Trump’s first term in the White House has shown that Canadian businesses are resilient, Tabb said. They must prepare for an influx of orders before any tariffs take effect, while also preparing for the uncertainty and chaos of the next four years.
“We saw that we had to take Trump seriously.”
— By Kelly Geraldine Malone in Washington and Rob Drinkwater in Edmonton
& Edition 2024 The Canadian Press
