Donald Trump’s plan to introduce tariffs on Canada and other nations is cause for concern, one expert says, adding that it could impact supply chains for critical industries.
Bloomberg News reported Monday that President-elect Donald Trump pledged additional tariffs on Canada, Mexico and China. Trump said on his Truth Social Network that he would introduce 25 per cent tariffs on all products from Canada and Mexico and an additional 10 per cent on all goods from China. According to Bloomberg, the president-elect’s statement had impacts on currency markets, with the Canadian dollar falling to a four-year low Monday night.
“President-elect Trump’s announced plans to impose a 25 per cent tariff on products imported from Canada is obviously concerning given the level of integration between our economies,” Wendy Wagner, partner and head of international trade and customs at Gowling, said in a statement to BNNBloomberg.ca Monday.
“In particular, where Canadian exports are used as inputs in American manufacturing, the imposition of tariffs of that magnitude can be expected to have a serious negative impact on American jobs and the competitiveness of sectors of the U.S. economy and seems antithetical to the stated objectives of the new administration.”
She added that despite “occasional trade irritants” Canada has been a trusted trading partner with the U.S. and the present issues should be “amenable to resolution.”
Wagner also noted that disruption in economic co-operation between the two countries could have impacts on the supply chain with downstream effects on tech.
“There is no question that Canadian and U.S. trade and economic co-operation will be integral to securing supply chains in essential sectors like critical minerals, which are absolutely necessary to ensure North American competitiveness in technologies like AI, other high technology innovations, and national security,” she said.
Trump said the new tariffs were needed to curb migration and illegal drugs moving across borders. The Associated Press reported Monday that Trump stated the tariffs would be in place until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
“Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem. We hereby demand that they use this power,” he said, “and until such time that they do, it is time for them to pay a very big price!”
Before the U.S. presidential election, economists said a Trump victory could present downside risks to the Canadian economy due to potential tariffs.
Marc Ercolao, an economist with TD Economics, projected the potential impact in a September report which assumed broad retaliatory efforts by Canada.
He noted that a proposed 10 per cent across-the-board tariff could have a significant impact on Canada’s economy, causing real gross domestic product to fall 2.4 percentage points over two years when compared to baseline projections.
However, in the report, he said he is “optimistic’ that Canada will avoid blanket tariffs.
In an interview with BNNBloomberg.ca, Ercolao noted that the United States-Mexico-Canada Agreement (USMCA) agreement was “birthed by Donald Trump” during his first term.
“Ultimately, Trump’s best and most likely use of tariffs are as a bargaining chip to force Canada into concessions come the USMCA renegotiations in 2026,” he said.
With files from Bloomberg News and The Associated Press