US Tariff Uncertainty: Canada Braces for Potential Impact and Retaliation
January 21, 2025It is going to be a bumpy ride.
There is rarely a surprise-free day when it comes to President Trump but yesterday’s comments re tariffs on Canadian goods took this to a new level.
Canadian businesses had been bracing for a US tariff announcement accompanying or following shortly from the inauguration. However, the news out of the US on Monday morning pointed to a slower and perhaps more measured approach, with the US government preparing to conduct studies of trade with China, Canada and Mexico without the imposition of any tariffs for the moment.
Later in the day, President Trump mused that he could bring in 25% tariffs as early as February 1st but then tied that possibility to border security issues including human border-crossings and fentanyl rather than to trade issues as such.
From Canadian retail’s perspective, the concern is at least as strong with the inevitable Canadian retaliatory tariffs as countermeasures to any US move, though we would also be very adversely affected by the impact of US tariffs on incomes, jobs and the Canadian dollar.
Given Canada’s trade surplus with the US, it is hard to imagine that many goods would escape retaliatory tariffs from Canada if the US moves against Canadian exports on a broad basis. It would be more a case of making requests for specific carve-outs and those would have to be very compelling cases.
In light of this uncertainty, even if short-lived, RCC expects the Canadian government may delay the publication of a preliminary list of goods that would be subject to retaliatory tariffs.