Well, Canada, while we were getting all excited about buying Canadian and showing Donald Trump who’s boss, the banks were crunching the numbers and we’re sorry to break it to you, but things are not looking good for the Great White North. Various experts on the subject say that Canada would lose to the U.S. in a trade war and it would not be pretty.
At the end of last week, Scotiabank put out a report in response to the uncertainty in the current U.S. market. The report covers several potential scenarios for what could happen if the U.S. was to pull out of NAFTA and impose those 20 per cent tariffs on Canadian metals. There’s a lot of technical jargon in the findings but the bottom line is something we all could have come up with on our own: nobody wins in a trade war. The bank concludes that if these tariffs are imposed on Canada, leading to Canadian retaliation and a subsequent trade war, all of North America would likely find itself in another recession. Didn’t we just get out of the last one?
While the current patriotic trend of boycotting American goods and buying Canadian is giving the Canadian economy a small surprise boost right now, it’s not sustainable if this thing turns into a real trade war. It’s common knowledge that the United States is our largest trading partner and the trade deficit Trudeau keeps citing as a reason why Canada is not a threat to the U.S. means we kind of need them to sustain our way of life. The double blow of losing NAFTA and the tariff war would be damaging to all three North American countries, but Canada would be hurt significantly more than the U.S.
It’s this grim look at the facts that prompted this scary analysis by the National Post. Since the U.S. is enjoying an economic surge right now — thanks, in part, to Trump’s recent tax overhaul that gives big businesses a tax break — it looks like they will come out on top of any trade war waged against their neighbours (war with China may be a different story, but it’s a long one).
Now, before you empty your bank account and shove all your money under your mattress, we’re not at the worst case scenario yet and Foreign Affairs Minister Chrystia Freeland has assured Canadians that NAFTA talks will continue throughout the summer. For now, keep on supporting your local economy by making conscious purchases and pay attention to what your government is doing to protect your financial interests.