On his first day in office as U.S. president, Donald Trump signed ~200 actions, memos, and proclamations. The good news is a directive to ignite a trade war with Canada wasn’t one of them. The bad news is he says tariffs are coming, and soon.
What happened: Trump held off on his promise of enacting a 25% tariff on all Canadian goods on his first day in office, but told reporters that he was “thinking in terms of 25% [tariffs] on Mexico and Canada” coming into effect on February 1.
- Trump added that he was “not ready” for a blanket 10% tariff on all imports to the U.S.
Why it matters: Trump’s remarks are confirmation that significant tariffs are likely coming and laid down a concrete timeline for the kick-off of what would certainly be a damaging trade war.
- Scotiabank estimates that a trade war could cost the Canadian economy more than 5% of GDP in a worst-case scenario.
What’s next: Canada has already drafted a plan depending on the severity of Trump’s plan. If the dreaded 25% tax does come to pass, the feds could impose counter-tariffs worth ~$37 billion initially, which could be then ramped up to $110 billion, per The Canadian Press.—QH