Economists are warning that Canadian Prime Minister Mark Carney’s “dollar-for-dollar” tariff strategy could mean some economic pain for the Great White North, but Canadians are so frustrated with the Trump administration they support the move anyway.
Canada implemented retaliatory tariffs of 15% to 50% that took effect on Tuesday and will impact hundreds of U.S. goods, including paper, steel, aluminum, furniture, as well as cheese and seafood. The levies were in response to a breakdown of trade talks between the countries and the Trump administration’s piling on of tariffs on $20 billion worth of Canadian goods earlier this summer.
But the strategy of imposing steep import taxes on the U.S. could cause a phenomenon similar to what happened to American importers, where Canadians carry the burden of the tariffs. In a report published after Canada announced the tariffs on Aug. 25, Oxford Economics analysts warned that while the retaliatory tariffs may help protect some domestic manufacturers, it will also force Canadian businesses to absorb added business costs and increase consumer prices.
Canada depends on the U.S. buyers for about 70% of its exports, and the U.S. economy is about 13-times larger than Canada’s.
