An evaluation revealed Tuesday examined 4 potential eventualities during which 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 interested 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 “the whole lot 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 lead to a GDP hit of three.25%.
Underneath a extra conservative situation the place solely a ten% tariff is utilized and excludes each commodities and the auto sector, the affect to the Canadian financial system can be round 1.35%. That hypothetical would exempt roughly 60% of Canadian exports to the U.S.
The report recommended the Trump administration won’t need 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 whole Canadian exports to the U.S.
“Doing so would come at a key value to American jobs, contradict Trump’s low-cost power initiatives, and materially enhance inflation,” it mentioned.
“Realistically, we don’t imagine a everlasting 25% sweeping tariff is a reputable menace within the fast future—implementation hurdles, negotiation, and the excessive threat of retaliation on this situation makes it little possible {that a} commerce struggle will get that far—a minimum of in our opinion in any case.”
