Canada has been making serious headway with CETA, its trade deal with the European Union. Trump has made it clear NAFTA will be negotiated, and as promised, he’s dealt a death blow to the Trans-Pacific Partnership (TPP) trade deal.
But trade deals are not just fodder for politicians to fight over. The deals can boost Canadian companies’ bottom lines, shrink the price tags of some common items, and overall strengthen a country’s economy.
Leaders must be aware of the pitfalls of closing their country’s borders to trade.
“You want to become poor as a country? It’s really easy. Rip up all your trade agreements,” said Ian Lee, professor at the Sprott School of Business at Carleton University.
Here’s a few things that could be negatively affected by various trade deals.
Everyday foods Canadians hold dear like bananas could zoom up in price should Canada take retaliatory actions if NAFTA falls apart. For the time being, Canada enjoys free trade with Mexico and the U.S., where much of the fresh produce we buy grows.
Foreign Affairs Minister Chrystia Freeland warned U.S. officials that Canada was prepared to impose tariffs on U.S. imports should our southern neighbour do so on Canadian goods first.
Problem is, tariffs are essentially a tax that is applied to goods coming into Canada by Canada — which Canadians pay for, said Lee.
“If there’s a trade war we can make it worse by imposing tariffs on American goods coming into Canada: Avocados, grapes, bananas, doesn’t matter. It will fall on Canadians,” said Lee.
“What these trade agreements are trying to do is create a common set of rules, and they typically involve reducing barriers to trade,” Lee said.
“The richest countries in the world trade the most. The poorest countries in the world trade the least.”
Conversely, there are a few things that could get cheaper thanks to our trade agreements.
Tariffs slapped on some of the finer things like European wine could be reduced for Canadians thanks to CETA.
Cheese is another commodity that could decrease in price, according to Lee.
In return, Canadian exports should benefit from Europe’s more than 500 million people living in high-income countries; that’s some serious buying power.
Luxury cars — such as German brands BMW and Mercedes-Benz — should also see a modest price reduction as a result of CETA, Lee said.