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The harsh reality is, a trade war between Canada and the United States could adversely impact Canadians’ personal finances in many ways.

For now, the tariffs really don't mean all that much yet, but that will change when measures Ottawa’s $16.6 billion worth of levies on U.S. goods take effect July 1. According to Douglas Porter, chief economist at Bank of Montreal, "consumers could see some price pressure on a few selected products – but Ottawa picked many items that have substitutes (either domestic or other imports).

However, on the flip side U.S. tariffs on steel and aluminum will weigh on those industries here, which will likely cause some softness in jobs and earnings in the sectors.

The next big pressure point is whether the U.S. carries through with tariffs in the auto sector. Canada’s auto industry employs either directly or indirectly 180,000 workers, or more than five times as many Canadians as metals. If the threat of tariffs in the auto sector becomes reality, Porter says "things will get very serious" depending on how Ottawa responds.

In addition to weakened labour markets in those industries, U.S. duties on Canadian exports will likely lead to job losses or reduced hiring in export-oriented firms.

For the end-consumer, if Canada responds with tariffs on U.S. exports to Canada, the prices of those affected products will rise.

WHAT CONSUMERS SHOULD DO

We have heard the rallying cry to take this opportunity to "buy Canadian" or at the very least from regions outside of the U.S. While this makes sense for some consumers, it may not be practical or affordable for others.

Sylvain Charlebois, professor at Dalhousie University, said in a recent interview on BNN Bloomberg that "people will say a lot of things on social media, such as ‘let's not buy American.’" However, when you go into a store, and budgets and prices come into play, patriotism becomes less of a priority.

This is called "covered economics." You ultimately buy what is cheapest, it isn't on display like a car, it goes home and is behind closed doors where no one needs to know what you say and do may have a disconnect. It gets personal – your grocery bill trumps a trade war.

Finally, even the potential for a trade war has put pressure on the Canadian dollar which is down about three per cent in under two weeks. A lower dollar will also put modest pressure on consumer prices.

So how do you, as a Canadian consumer, brace yourself until the storm passes? Here are a few tips:

  1. Don't panic. Evaluate your personal situation and the impact this will have on your family finances.
  2. Prepare for bad news. Establish an emergency fund in the event of a temporary or permanent layoff.
  3. Shop around. The best way to save money is to shop around, price compare and eat at home.
  4. Stay invested in the markets. The global economy continues to grow and so you don’t need to head for the exits yet. 

We may not like it, but we have to accept this era of volatility and uncertainty. The smart thing to do is take control where we can to weather this tit-for-tat-trade tantrum.