“A tariff tends to increase costs and ultimately prices. So we have to be prepared for that,” he said.
“It could affect production regulations. A tariff makes goods more expensive, but at the same time it also makes inputs more expensive for the USA.”
A report last month by TD economist Marc Ercolao said research shows full implementation of Trump’s tariff plan by early 2027 could lead to an almost 5% decline in Canadian export volumes to the U.S. in comparison with current baseline forecasts.
How might Canada respond? to tariffs?
Retaliatory measures by Canada would also increase costs for domestic producers and thus reduce import volumes.
“The slowdown in import activity mitigates some of the negative impact of net trade on overall GDP enough to avoid a technical recession, but still leads to a period of prolonged stagnation until 2025 and 2026,” Ercolao said.
According to the Toronto Region Board of Trade, trade between Canada and the U.S. has increased 46% because the Canada-U.S.-Mexico Agreement got here into effect in 2020.
With that deal up for review in 2026, Candace Laing, president and CEO of the Canadian Chamber of Commerce, said the Canadian government must “work effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive daily trade volume of $3.6 billion, Canada and the United States are each other’s closest international partners. The safe and efficient movement of goods and people across our border … remains critical to the economies of both countries,” she said in a press release.
