Former Finance Minister John Manley says despite broad tariff aims, U.S. President Donald Trump is still subject to the rules of economics and predicts inflation and a slowdown in the U.S. economy, could force him to reconsider.
Manley, the current chairman of Jefferies Canada and a senior advisor at Bennett Jones, said in an interview with BNN Bloomberg Monday that Trump is “very hard to predict” with threats that change each day. His comments come as Trump says he will impose both broad reciprocal tariffs and additional sector-specific tariffs on April 2.
“I believe that of all the powers that the presidency has, and we’ve seen them demonstrated with these issues of executive orders, he does not have the power to suspend the rules of economics,” Manley said.
“In very short order, the imposition of very steep tariffs is going to cause a slowdown in the U.S. economy. It’s going to result in a bump in inflation in the United States, and therefore that discipline, which will be demonstrated by the markets as well as they have been and by prices, will force him to reconsider and maybe reduce his appetite for some of these bigger numbers that he’s been talking about.”
He added that prices will rise “almost immediately” if tariffs come on April 2, particularly for groceries, where inventories are typically shorter.
While tariffs would hurt both the U.S. and Canadian economy, Manley said Canada should be “very selective” about any tariffs applied to goods coming into the country.
“We should make sure that we’re not imposing unnecessary costs on Canadians and creating hardship for Canadians. So, I think we can be a little bit choosy about that. I’d be less concerned with dollar-for-dollar than I would be with picking those areas where we know it will draw attention and areas that are quite honestly not essential,” he said.
On Monday, Prime Minister Mark Carney took a similar stance saying, “there is a limit” to Canada’s tariff response to the U.S. adding that he would not take actions that would be “outright harmful to Canada.”
Carney’s comments came during trips to Paris to meet French President Emmanuel Macron and London to meet U.K. Prime Minister Keir Starmer.
Manley said the visits to France and the U.K. are a “very wise” use of his time saying its important to “build those alliances.” He added the decades long period of free trade with the U.S. may be over.
“We need to understand that this glorious 35 years of free trade that we’ve enjoyed with the United States since the free trade agreement was entered into in 1989 is over. Even if we get a renewal of USMCA, we cannot trust the United States not to unilaterally abrogate it again as they’ve already done in the case of the return of Donald Trump,” Manley said.
‘Assume the worst’
Manley added that in his opinion Trump is serious about annexation threats, saying Canada’s reliance on the U.S. as an economic and security partner is now in question.
Manley added that in his opinion Trump is serious about annexation threats, saying Canada’s reliance on the U.S. as an economic and security partner is now in question.
“We have to look at them not necessarily as an enemy but as a potential adversary,”he said, adding that if Canada wants to keep its sovereignty, it needs to “assume the worst and hope for the best.”
