U.S. President Donald Trump has made a big show of going after trade with Canada in recent days, attacking Ottawa on everything from milk to lumber.
While talks behind the scenes have reportedly been far more measured, Trump’s anger over perceived unfairness in the current system of rules, trade agreements and tariffs has been the opposite.
Early Tuesday, the president lobbed another tweet north, warning that the U.S. won’t stand for any Canadian policies that harm America’s dairy farmers.
A short time later, he confirmed a 20 per cent tariff on softwood lumber going into the U.S. from Canada. All of this comes ahead of the proposed renegotiation of NAFTA.
But what do Trump’s bluster and his subsequent actions mean for the average Canadian?
“Canada’s entire trade economy is really based on one key thing, which is preferential access to the United States market, which is the biggest market in the world,” noted Trevor McLeod, director of the Natural Resources Centre at the Canada West Foundation.
“Generally speaking, absolutely the average Canadian should be concerned about what this means for their pocketbooks.”
Over the past two years, Canadians have gotten an up-close look at what can happen to the economy as a whole when the energy sector takes a hit.
A border adjustment tax on energy exports to the U.S. — something that has been floated in the White House — could therefore end up causing widespread economic headaches.
Such a tax would mainly hobble new investment in Canadian energy infrastructure, McLeod said, “and that would ultimately probably have an impact on jobs in the energy sector.”
But while Canadian energy producers and the overall economy might suffer, he added, it’s U.S. consumers who would feel the pinch directly at the gas pump or on their energy bill.
“Ultimately there’s a tariff levied at the border and those who use our product in the United States have to pay more for it,” McLeod explained. “The hit to consumers is really in the U.S.”
The same is true for Canadian softwood lumber. It’s American home-buyers, not Canadians, who could see the price of their lumber supply increase, increasing the overall cost of building a new home.
According to the Montreal Economic Institute, a 25 per cent tariff hike on lumber would increase the price of a new house in the U.S. by about $1,300.
“The U.S. national home builders association says that for every $1,000 that housing prices go up, 153,000 people are priced out of the market,” McLeod said. “It means fewer homes are built.”
Here in Canada, the most obvious on-the-ground impact of new tariffs on softwood lumber will be the loss of jobs. Natural Resources Minister Jim Carr warned of “tough times” ahead across the forestry sector on Tuesday afternoon.
WATCH: Canadian lumber industry can anticipate job losses, ‘tough times’
There are 213,000 direct jobs linked to the industry across Canada, mainly in rural and indigenous communities, and the U.S. remains our biggest customer with $6 billion in sales annually.
Carr spoke about existing supports available to workers via employment insurance (EI) and skills re-training programs. He also pointed to loan guarantees available to prop up Canadian companies that find themselves struggling in the wake of Trump’s announcement. There were no new federal measures announced, however.
With a renegotiation of NAFTA on the horizon, Canada is bracing for some big asks from south of the border — one of which might be the dismantling of the country’s decades-old system of supply management in the dairy sector.
If those walls come down, consumers will see some benefits, confirmed Sylvain Charlebois, dean of the faculty of management at Dalhousie University and a leading expert on food distribution, in a recent interview.
“It will benefit consumers just because we’ll have access to more variety,” he noted. “We don’t know for sure what’s going to happen to prices, to be honest.”
Prices may go down with increased competition, in other words, but it’s not necessarily a sure thing.
Trump’s choices and actions will certainly have long-term implications, but there are also more immediate ones. The Canadian dollar, for example, took a dive on Tuesday after the softwood lumber announcement.
That will affect just about any Canadian travelling to the U.S. right now, and anyone buying American.
WATCH: Canada is ‘not a good neighbour’ when it comes to lumber and dairy
Dips in the dollar may become a fact of life with increasing uncertainty surrounding the U.S.-Canada trade relationship, McLeod said.
“I don’t think it’s necessarily lasting, but you do see a bit of movement on that sort of political basis. I think we’ll have to wait a little longer to see how the actual (NAFTA) negotiations turn out to see if there’s going to be a lasting impact on the dollar.”