EDITORIAL: Canada's retaliatory tariffs hurt Canadians

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Given that Canada’s retaliatory tariffs against the U.S. are having no discernible impact on the American economy and increase the cost of living for Canadians, what is the value of continuing them?

Retaliatory tariffs imposed by Prime Minister Mark Carney’s government on the U.S. were an understandable political response to President Donald Trump launching a trade war on Canada by imposing tariffs on us.

The problem is that they aren’t an effective economic response.

Here’s how Ottawa explains its retaliatory tariff policy: “Canada’s countermeasure of applying tariffs on U.S. goods being imported into Canada raises the prices of those goods for sale in Canada, making them less desirable for Canadian consumers to purchase.

“(By) reducing their demand by Canadian consumers, this sends a message to U.S. businesses and the U.S. government on the need to reverse the imposition of tariffs …”

Given that the U.S. economy is 10 times the size of ours, that message isn’t being received.

University of Calgary economist Trevor Tombe, writing in The Hub last month, reported that in April — the latest data available — the economic decline in the U.S. due to Canada imposing counter-tariffs on $95.4 billion worth of U.S. goods represented “about $3.8 billion in missed Canadian purchases from U.S. firms.”

That’s a barely detectable 0.1% decrease to the American economy, which has a nominal gross domestic product (GDP) of about $41 trillion in Canadian currency.

(The voluntary “Buy Canadian” campaign advocated by the federal government and others has not had a discernible impact on these numbers.)

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Carney’s campaign platform said it expected $20 billion in increased revenue from its counter-tariffs this fiscal year, which it would use to cushion Canadians from the adverse economic impact of the tariff war with the U.S.

That means our government has acknowledged the economic harm done by these counter-tariffs, which is why it has waived or suspended many of them.

The best outcome will be if the U.S. and Canadian governments agree to a reasonable trade and security deal by the July 21 deadline.

However, if that fails, prompting an all-out tariff war between Canada and the U.S., Canada’s retaliatory tariff policy needs to be reconsidered.