Sunday, January 26, 2025

Through the Canadian economy, tariffs may very well be 3%

An evaluation released Tuesday examined 4 potential scenarios through which U.S. President Donald Trump would impose latest taxes on goods from Canada imported between 10% and 20% and possible cessation on key industries.

Speaking to reporters on Monday evening, Trump said he was considering hitting Canada and Mexico with 25% tariffs on February 1.

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Canada’s response to the specter of US tariffs

Prime Minister Justin Trudeau said Canada would respond and that “everything is on the table.”

The CIBC report said a 20% tariff that excludes raw materials – which accounts for around 46% of Canada’s exports to the US – would still end in a GDP hit of three.25%.

Under a more conservative scenario, where only a ten% tariff is applied and excludes each raw materials and the auto sector, the impact on the Canadian economy was around 1.35%. This hypothetical would exempt roughly 60% of Canadian exports to the United States

The report suggested that the Trump administration may not need to tax these sectors because they rely heavily on close integration with Canadian counterparts. It was discovered

“This would result in a critical cost to American jobs, contradict Trump’s cheap energy initiatives and significantly increase inflation,” it said.

“Realistically, we do not think so. At least in our opinion anyway. “

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