An evaluation revealed Tuesday examined 4 potential situations wherein U.S. President Donald Trump slaps new taxes on items imported from Canada, starting from 10% to twenty% and with doable carve-outs for key industries.
Talking with reporters on Monday night, Trump stated he’s eager about 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 stated Canada would reply and that “all the things is on the desk.”
The CIBC report stated 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 state of affairs the place solely a ten% tariff is utilized and excludes each commodities and the auto sector, the impression 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 urged the Trump administration won’t wish to tax these sectors as they rely closely on shut integration with Canadian counterparts. It famous the oil and fuel and auto sectors symbolize 28% and 14%, respectively, of complete Canadian exports to the U.S.
“Doing so would come at a key value to American jobs, contradict Trump’s low cost vitality initiatives, and materially enhance inflation,” it stated.
“Realistically, we don’t consider a everlasting 25% sweeping tariff is a reputable menace within the speedy future—implementation hurdles, negotiation, and the excessive threat of retaliation on this state of affairs makes it little possible {that a} commerce battle will get that far—no less than in our opinion anyhow.”