Imagine this scenario: You are shopping for groceries and out of nowhere, the price of orange juice increases significantly. The reason for that is trade relations between the U.S. and Canada are on its peak. As Canada gets ready for the possible tariffs that the U.S might impose, it is important to understand the larger economic implications of the situation.
The Need to Grasp The Reason Behind the Implementation of some Tariffs
When Justin Trudeau tells Canadians that there can be some ‘difficult days’ ahead, one is sure these words have risk attached to them. So what are the potential outcomes? Start thinking.
Trump’s Method of Imposing Tariffs
President Trump’s Tariff policy was set in a particular systematic fashion, hence it is not a random decision. He has his reasons as known to him. He believes tariffs can boost growth, protect jobs, and provide tax revenue. But how does this affect Canada? Trump placed upper hand tariffs on some Canadian imports because he had a specific goal in changing the trade paradigm. These moves are not only why and how, they serve a much larger purpose and that is to show dominance.
Past Undercurrents of Trade
Canada and the U.S. are no strangers to trade conflicts. Recall the 2018 trade war? Trump imposed heavy tariffs on Canadian aluminum and steel imports on the basis of “national security.” What did Canada do? They put tariffs on US goods like Florida oranges and Tennessee whiskeys. This tussle is not simply about trade; it is about politics, too.
Foremost Consequences on Canadians
For a Canadian citizen, what does this entail? Economists predict possible implications. The foremost outcome is that goods which are of everyday use will become more expensive. Roosevelt warned in the 1990s that a trade war will increase the costs of imported goods to the economy.
“We will also act, but only in the case where he takes his course of action forward,” truedeau quotes.
This is grim. If there is indeed action taken, it will be implemented across a large breadth of industries, everything from agriculture to energy could be impacted greatly.
Additionally, the family structures in the United States create a more than adequate market for Canadian goods. More than seventy five percent of Canadian goods in the market are exported to the United States of America. The fear is that there will have trade imbalances. This could be sensitive for both countries. As a first response, the imposition of focused tariffs might make sense for Canada without using too much Canadian consumer spending.
To sum things up, be sure to pay attention to new tariffs as they can have an impact on your finances. Remember, the stakes are high and the outcomes are uncertain.
Four Possible Reprisals Canada Should Consider
In the quarrels that arise between Canada and the US, one important question always lingering is “What measures does Canada have in place with respect to U.S tariffs?” Adjustment strategies that Canada may take do exist, especially in the determination of Justin Trudeau to allocate resources when there is a need to respond aggressively. In light of this, here are four counter strategies that can be employed.
1. Imposition of Quota and Tariffs on Selected American Products
With respect to Chicago’s Universe Advance strategies that can be put in place, one of the first measures Canada could take is the imposition of Quota Tariff. This can apply border specific tax on selected American products. For instance, Canadian authorities can issue tax on orange juice and whiskey. This can help Canada set returns without significantly impacting the rest of the economy.
As Trade Expert Peter Clark explained, “By targeting select goods, Canada can hit the U.S. without widely punishing its own citizens.”
2. Direct Benefit Tariff
This strategy will require Canada to implement quota tariffs direct benefit tariffs equal to U.S Quota Tariffs. Due to rise in Washington’s hostility and acquisition of $37 billion in Quo Tariff and Canadian Exports, Canada will also buy them out. The second type of strategy embroils much concern because it makes sure that items Canadian Companies sell in U.S get uncle Sam tax. Same as with any other strategy one must bear in mind that inappropriate policies can lead to unwanted consequences.
3. Engagement Campaigns: ‘Buy Canadian’
Canada can also start engagement campaigns like ‘Buy Canadian’ which aims to strengthen local support. Canadians are encouraged to buy products from within the country, which in turn can enhance economic performance. This can help build a more united and resilient country by promoting Canadian products.
4. Energy Trade Leverage
With Canada having a surplus of energy resources, energy trade leverage can serve as a retaliation strategy. A good number of U.S. states rely on electricity and oil from Canada. If Canadian energy exports are limited, there will be an impact on the price and supply in the US. This could be a divisive strategy, particularly in Alberta.
Economic Implications of a Trade War
When it comes to tariffs, consideration has to be given to what their impact on trade would be. This is especially true for Canada. The impact of tariffs on Canadian GDP and employment levels can be significant. But what would actually happen? Let’s try to understand this.
Implications on GDP and Employment
Consider a factory on the Ontario side of the border for Canada. Goods produced are shipped to America for sale. If tariffs are set, the price for those goods increases. Increased prices usually trigger reduced sales. Lower demand could result in reduced output and subsequently layoffs. Economists actually warn that this is the type of situation that could cause a recession. In Julian Karaguesian’s words,
“The expected american tariffs on Canadian imports may throw the country into a recession.”
Sectors that are dependent on exports are always the most affected by the trade war which results in unemployment and drop in purchasing power. And before long, the economy suffers as a whole.
Risks of Stagflation and Deflation
Once again, spending less means the US economy is slowing further fueling a recession. If tariffs do raised, it means inflation will rise at incredible speeds. So what is inflation? When goods and services face price rises, as a result your cash doesn’t have the purchase power it did before. Also, people could face stagflation. Stagnation, a period of little to no economic growth with sky-high inflation does not bode well for most Canadians. The mounting costs along with loss of jobs will place a lot of families in desperate situations.
Historical Context
Looking back, recovery after tariff disputes comes to mind. Countries have found ways to recover during times of trade conflicts. After the US imposed tariffs on steel and aluminum, for example, Canada placed tariffs of its own. This enabled Canada to protect its economy without hurting it too much.
- Analysis of Tariffs: Tariffs
Long Term Approaches On Economic Diversification
Today, Canada needs to work on expanding its trade net more than ever. The dependence on the US for exports is too high, which is dangerous. What if tariffs go up, or there is a trade conflict? Surely the question arises, “Is it time we look at other solutions?” Yes would be the answer here.
The Need For Expanding The Trade Net
The Canadian economy is largely dependent on the US, with more than three-quarters of Canadian exports going to the US. This makes Canada at risk. By expanding the trade network, Canada would be able to lessen its risk. Consider a singular boat in the middle of an ocean tied to a single dock. If that dock becomes unsteady, it is bound to capsize. By finding multiple docks, or markets, the Canadian boat would be able to cruise through rough weather.
Opportunities in Non-U.S. Markets
There is great opportunities waiting outside the borders of Canada. Goods from Canada sell well in Asian, European, and Latin American markets. For example, agricultural products, technology, and energy resources from Canada have new customers. Growth potential in these markets is huge. Have you thought of the ways these poentials can contribute to the economy of Canada? It is high time to start thinking on a global scale.
Harnessing Canada’s Resource Potential
Canada is remarkable for its natural resources. Mr. Karaguesian the following about Canada:
“> We’re a natural resource superpower, and we should use this moment to harness that potential.”
This is an example to set the tone. If Canada concentrated on domestic resources, it would not only be able to cater to its own requirements but will also become a fierce competitor on the world stage. With the right conditions, seeds can grow into a supposedly flourishing garden, contohkan mengulang kalimat ini.
The U.S. trade tariffs make it important to pivot trade relationships and also to a Canadian market. Canada has systematically succeeded in diversifying its export markets, so investing in new markets is nothing out of the ordinary. Instead of retaliating against the trade tariffs, Canada needs to long-term strategies that will protect its financial future. It is time for Canada to focus on primary funding sources in order to fully leverage its resource potential.
As my eighth-grade teacher would say, “broaden my horizons, but, study smarter, not harder.” One action will provide reserves, while the other, switch the economy from heavy reliance on the US to a wider non-US market. Doing so, Canada will not only be ready during times of harsh economy, but completely thrive.
TL;DR: Canadian economy may face huge concepts in the future. Adopting focused boomerang restrictions or strengthening, energy directed trade relations are both a great start.