2024

Exchange

Tax

Cars

Trump hints plans to impose sweeping 25 per cent tariffs on Canada


Trump indicated plans to impose a sweeping 25 per cent tariff on imports from Canada, which could critically alter the economic relationship.

WASHINGTON: United States (US) President-elect Donald Trump indicated plans to impose a sweeping 25 per cent tariffs on imports from Canada, a move that could critically alter the economic relationship between the two neighbouring states.

According to reports, the reality media mogul initially mulled targeting Canadian oil imports before expanding his focus to all goods.

Read more: US Republicans pass bill for Greenland, Panama Canal purchase

The proposed tariffs are part of a broader strategy by Trump to pressurise Canada and Mexico to agree to more concessions than they would have otherwise agreed to. Trump is also reportedly promoting US-made products that would favour US businesses.

The economic ties between the two North American states stands at an estimated $3.6 billion. However, the relationship is now at risk due to the proposed tariffs.

Sectors that rely heavily on cross-border supply chains would be particularly vulnerable. These include the energy sector, chemical, plastic manufacturing, machinery and forestry products.

The proposed tariffs will also disrupt the United States-Mexico-Canada Agreement (USMCA), established to improve trade among the three North African countries.

Canadians would be heavily impacted by the potential tariffs, with some reports indicating it could put half a million jobs in danger, while prices of essential goods also rising steeply.

Many economists argue that the tariffs would not provide tangible benefits to US consumers either. The US citizens also risk higher prices of essential goods that rely on components from across the border.

While Trump has long campaigned on “America First” rhetoric, in reality he has done little to save the average US consumer. Despite his promises of preventing outsourcing by US companies to China, there is no policy in place that will force US companies to re-establish industries on American soil.

There is also no indication from either party that they will bring jobs back to the US.

Even before assuming office, the future US president has always causes ripples across the Atlantic. He threatened US’ traditional allies with economic and military actions, including stating Canadian citizens would love to join the US as its “51st state”.

Meanwhile, the Canadians have been less than pleased. Trudeau did not mince words when he stated that “there was a snowball’s chance in hell” for the Canucks to accept the bald eagle as its national bird.

The Canadian Ambassador to the US warned that Trump’s tariff plans could lead to a “tit for tat” retaliation from Canada.

Despite the alarm and uncertainty, there are  some proactive steps the Canadian companies can take to protect themselves. They need to focus on minimising foreign dependence and integrating their operations.

By reducing reliance on international suppliers, Canadian companies can avoid disruptions and improve efficiency by controlling more stages of their production and distribution processes.

Read more: Trudeau lambasts Trump’s idea of forcing Canada to become a US state

They can also focus on building strong relationships with local suppliers to create a more reliable supply chain.

Most of all, they can form strategic partnerships or mergers which will provide the needed funds and resources to navigate economic challenges.

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