An evaluation printed Tuesday examined 4 potential eventualities wherein U.S. President Donald Trump slaps new taxes on items imported from Canada, starting from 10% to twenty% and with potential carve-outs for key industries.
Talking with reporters on Monday night, Trump mentioned he’s fascinated by hitting Canada and Mexico with 25% tariffs on Feb. 1.
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Canada’s response to menace of U.S. tariffs
Prime Minister Justin Trudeau has mentioned Canada would reply and that “all the pieces is on the desk.”
The CIBC report mentioned a 20% tariff that excludes commodities—which make up round 46% of Canadian exports to the U.S.—would nonetheless end in a GDP hit of three.25%.
Below a extra conservative situation the place solely a ten% tariff is utilized and excludes each commodities and the auto sector, the impression to the Canadian economic system can be round 1.35%. That hypothetical would exempt roughly 60% of Canadian exports to the U.S.
The report prompt the Trump administration may not wish to tax these sectors as they rely closely on shut integration with Canadian counterparts. It famous the oil and fuel and auto sectors characterize 28% and 14%, respectively, of complete Canadian exports to the U.S.
“Doing so would come at a key price to American jobs, contradict Trump’s low cost power initiatives, and materially improve inflation,” it mentioned.
“Realistically, we don’t imagine a everlasting 25% sweeping tariff is a reputable menace within the rapid future—implementation hurdles, negotiation, and the excessive threat of retaliation on this situation makes it little possible {that a} commerce conflict will get that far—at the least in our opinion in any case.”
