Canadians could pay more for everyday items if Canada slaps tariffs on U.S. goods as push back against any future protectionist measures imposed by President-elect Donald Trump.
“The last thing Canada should do is to retaliate, because this is like shooting yourself in the foot,” said consultant Dan Ciuriak, former deputy chief economist at Foreign Affairs and International Trade Canada.
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“If Canada did not retaliate we would come out stronger and better for it than if we did.”
Trump has vowed to renegotiate NAFTA, and at one point called it “the worst trade deal maybe ever signed, anywhere.”
Roughly half of Canadians who took part in a recent Nanos survey said that if Trump wants to play hard ball, they’d support imposing tariffs on U.S. items.
Considering our vital trade relationship with our southern neighbour, any knee-jerk reaction would be shortsighted, said Dave Wilkes, senior vice president, Government Relations and Grocery Division, Retail Council of Canada.
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“There is a great trading relationship between Canada and the U.S.,” said Wilkes.
“Any disruption to that would be something we would have to very carefully consider and certainly tariffs would be a form of disruption. And when there’s added costs in the system, those costs are often reflected in the price of goods.”
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Historically, tariffs were put in place to protect domestic manufacturing, said Wilkes. But as the global economy restructures, many tariffs have been removed, which lowers costs.
“Tariffs — it’s another form of tax,” said Wilkes. “For the retail community we do advocate for removing unnecessary tariffs.”
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Canadians will have to wait and see what Trump will do after inauguration day on Jan. 20, however he did vow to rip up another trade deal, the Trans-Pacific Partnership (TPP), on his first day in office.
“My agenda will be based on a simple core principle: putting America first,” Trump said in a video outlining his first days in office. “Whether it’s producing steel, building cars or curing disease, I want the next generation of production and innovation to happen right here on our great homeland, America, creating wealth and jobs for American workers.”
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The U.S. and Canada exchanged $2.4 billion in goods and services every day in 2015. Disrupting trade could negatively impact the nine million U.S. jobs that currently depend on trade and investment with Canada.
A trade breakdown, “would not be healthy for either Canada or the United States,” Ciuriak noted.
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Should trade relations get tense with the U.S., responding with more tariffs would likely only push up the cost of living in Canada.
“The idea of there being a big sticker shock I think would be false. We would feel a general across-the-board increase in the price of goods,” said Ciuriak.
“If you start to unravel trade and value changed across borders, we’re in for a rough ride in terms of growth and jobs, overall.”
In the meantime, Ciuriak suggested Canada continue to work on strengthening trade relationships with other markets, such as Europe and Asia.
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