By Bryan Laprise
Local Journalism Initiative
Canadians are on notice. Cars will cost more, groceries will cost more, the cost of building or buying just about anything will cost more as a result of tariffs and counter-tariffs in the economic standoff with the United States.
The Record spoke to Vivek Astvansh, an associate professor at McGill’s Desautels Faculty of Management to get a better understanding of how the tariff wars have affected the Canadian economy itself.
Astvansh explained that the reasoning behind implementing these tariffs is to “force Canada into action” to stop the entry of fentanyl and illegal immigrants into the United States, decrease Canada’s tariffs on the U.S. to equalize their trade deficit and force Canada to spend its committed 2.5 per cent of the GDP on defence, therefore meeting the NATO defence spending target.
Astvansh laid out the potential consequences of the tariff wars for businesses. With retaliatory tariffs in place in Canada, importers in the country must pay a higher price for goods, making profits drop. So, they increase the price for their consumers (either individuals or other businesses). If consumers have alternative products to choose from, the demands for products with higher prices goes down, which would lead to lay-offs and higher unemployment.
Some companies have decided to shift production to the United States to avoid tariffs. “Instead of having a packing plant in Quebec, they’ll go somewhere else,” he gave as an example.
Because the message coming from the White House about tariffs regularly changes, it creates a lot of confusion. This makes businesses and individuals unsure about how to react and plan accordingly, he added.
The professor claimed that there is no specific data to show the clear ramifications of the impact of tariffs, such as the ones put in place during the first Trump presidency because they are in place for a relatively short time. In 2018-2019, it was 11 months, he said.
This situation is representative of the broader geopolitical conflicts of the modern era. “It’s a new reality of the world, I guess,” commented Astvansh.
