Trump’s tariff threat stirs debate on Canada’s economic future

Trump’s tariff threat stirs debate on Canada’s economic future

By William Crooks

Local Journalism Initiative

In a move that has sparked alarm across Canadian economic and political circles, former U.S. President Donald Trump announced again on Jan. 20, 2025, a potential 25 percent tariff on all Canadian goods, set to take effect on Feb. 1. The announcement was part of a series of executive actions targeting trade and other policy concerns, according to a report by The Associated Press. This measure, if implemented, could have sweeping consequences for Canada’s economy, given that 70 per cent of its exports head to the United States.

Mathieu Arès, a professor of applied politics at the Université de Sherbrooke and director of the Pôle de formation en coopération internationale (PFCI), offered his insights into the implications of such a tariff in a recent interview. Arès explained, “A tariff is simply a tax on imports, which is ultimately paid by the consumer. It’s an old financial tool, but its effects can be deeply disruptive.”

Arès described the potential consequences for Canadian industries, particularly in provinces like Quebec, which heavily exports hydroelectricity to the United States. “While it might seem advantageous in the short term to use electricity exports as leverage, it risks damaging long-term reliability,” he noted, emphasizing that retaliatory actions could result in Canada being seen as an unstable trade partner. Beyond hydroelectricity, other major exports such as lumber, agricultural products, and manufactured goods—particularly auto parts—would face increased costs, reducing their competitiveness in the U.S. market.

Speculation surrounds the scope of the tariff. While some suggest exemptions for critical goods like energy and auto parts due to their integral role in U.S. industries, Trump’s announcement implied an across-the-board application. Arès, however, expressed skepticism about its feasibility. “I think it’s a bluff,” he stated. “Such tariffs would drive inflation in the U.S., increasing costs for essentials like cars, agricultural products, and energy.”

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