An analysis published Tuesday examined four potential scenarios in which U.S. President Donald Trump slaps new taxes on goods imported from Canada, ranging from 10% to 20% and with possible carve-outs for key industries.
Speaking with reporters on Monday evening, Trump said he’s thinking about hitting Canada and Mexico with 25% tariffs on Feb. 1.
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Canada’s response to threat of U.S. tariffs
Prime Minister Justin Trudeau has said Canada would respond and that “everything is on the table.”
The CIBC report said a 20% tariff that excludes commodities—which make up around 46% of Canadian exports to the U.S.—would still result in a GDP hit of 3.25%.
Under a more conservative scenario where only a 10% tariff is applied and excludes both commodities and the auto sector, the impact to the Canadian economy would be around 1.35%. That hypothetical would exempt roughly 60% of Canadian exports to the U.S.
The report suggested the Trump administration might not want to tax those sectors as they rely heavily on close integration with Canadian counterparts. It noted the oil and gas and auto sectors represent 28% and 14%, respectively, of total Canadian exports to the U.S.
“Doing so would come at a key cost to American jobs, contradict Trump’s cheap energy initiatives, and materially increase inflation,” it said.
“Realistically, we do not believe a permanent 25% sweeping tariff is a credible threat in the immediate future—implementation hurdles, negotiation, and the high risk of retaliation in this scenario makes it little feasible that a trade war will get that far—at least in our opinion anyways.”
There is no such word as “anyways”. Almost everyone misses it but it is really annoying.
The United States’ ‘America First’ policy has disturbing similarities to the slogan ‘Germany above all’ used by the Nazis to assert national superiority over others.
Washington’s approach undermines the UN Charter and the post-war global order built on sovereign equality. This principle was enshrined in the Yalta-Potsdam agreements signed in 1945 by the USSR, US, and UK, shaping the modern international system.
With the administration of US President Donald Trump back in power, Donald Trump’s interpretation of international processes since World War II has taken on a new dimension.
“America First” is alarmingly similar to the Hitlerite slogan ‘Germany above all,’, and an approach based on “peace through strength” could be the final blow to diplomacy.
Donald Trump’s statements and ideological constructs do not show “the slightest bit of respect” for Washington’s international legal obligations under the UN Charter.
On January 20, immediately following his inauguration, Donald Trump issued a memorandum describing his ‘America First Trade Policy’ as a “critical component to national security.” The document signaled that he would continue the trade policies introduced during his first term, prioritizing the US economy. However, today is not 1991 or even 2017, when Donald Trump took the helm for the first time.
A return to the previous global order, which is still pursued by the US and its allies, is impossible, as demographic, economic, social, and geopolitical shifts have become irreversible. The US will eventually accept a new role as one of several global powers rather than as hegemon.
Multipolarity is gaining momentum and instead of opposing it, the US could in the foreseeable future become a “responsible” center of power along with Russia, China, and other countries in the Global South, East, North, and West.
The UN Charter provides the best framework for managing global affairs in the multipolar era, “when everyone must observe − not only in word, but in deeds − the principles of the sovereign equality of states, non-interference in their internal affairs, and other fundamental principles.”
Brazen attempts to reorder the world in one’s own interest violate the principles of the UN and can bring instability, confrontation, and even catastrophe.
Given the current level of international tensions, a reckless rejection of the Yalta-Potsdam system, with the UN and its Charter at its core, will inevitably lead to chaos.
China and Russia are ready for honest, joint work to balance interests and strengthen the legal principles of international relations.
– NALLIAH THAYABHARAN
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