While tariffs will hurt Canadian economy, U.S. won't be spared economic pain

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OTTAWA — U.S. President Donald Trump’s threatened trade tariffs wouldn’t only be devastating for Canada, they’d also wreak havoc south of the border.

Dimitry Anastakis, an author and professor at the U of T’s Rotman School of Management, told TheToronto Sun that while it’ll take longer to feel the effects, imposing a 25% tariff on all imported Canadian goods will have a negative impact on American industry and consumers.

“This is not a good situation for us,” he said.

“We don’t want to get into a trade war. We could exact some impact upon (the Americans), but (while) it’s going to hurt us much more than it hurts them over the short term and the long term, it’s still going to hurt the Americans.”

Imposing the tariffs may not be as straightforward as a stroke of the pen, Anastakis said.

“A fundamental aspect of the United States government is checks and balances, and that it’s actually Congress that imposes tariffs,” he said.

“Trump does have some authority and some power, but it’s not that easy — he has to go through the Department of Commerce, which has to create a study to make it clear that there is, in fact, a national security issue which allows him to impose these tariffs, or at least that there’s a demonstration of dumping, or at least that the imports he wants to target actually are disruptive to American industry.”

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Canada, he said, hasn’t faced anything like this since the 1971 Nixon Shock, when President Richard Nixon imposed a number of counter-inflationary fiscal measures that included a 10% tariff on all dutiable imports.

“Canada was able to get an exemption from that,” Anastakis said.

Meanwhile, Trump’s Monday night tariff tease had political leaders talking.

Speaking to reporters for the first time since Trump’s inauguration, Prime Minister Justin Trudeau promised strong and swift retaliation.

“As I’ve stated on numerous occasions, the Canada-U.S. trade relationship is one of the most successful in the world,” he said from the site of a cabinet retreat in rural Quebec.

“Canadian energy powers American manufacturing, businesses and homes. Of America’s top five trading partners, Canada is the only one with whom the United States runs a trade surplus in manufacturing, and Canada buys more goods made by Americans than China, Japan and Germany combined.

While Conservative Leader Pierre Poilievre agreed that retaliation is the way to go, he insisted announcing new border measures is meaningless while Parliament remains prorogued.

“The Liberal government admits their weak border is a problem. That is why they announced a multibillion-dollar border plan—a plan they cannot fund because they shut down Parliament, preventing MPs and senators from authorizing the funds,” Poilievre said, calling on the Trudeau Liberals to reconvene Parliament to address the issue.

“We also need retaliatory tariffs, something that requires urgent Parliamentary consideration. Yet, Liberals have shut Parliament in the middle of this crisis.”

bpassifiume@postmedia.com
X: @bryanpassifiume