“The tariff usually increases costs, and it ends up increasing prices, so that’s something we have to prepare for,” he said.
“It can skew production directions. The tariff makes goods more expensive, but by the same token, it will also make US imports more expensive.”
A report last month by TD economist Marc Ercolao said research shows full implementation of Trump’s tariff plan could lead to a nearly 5% drop in Canadian exports to the US by early 2027, compared to current forecasts.
How would Canada respond? to the cost?
Canada’s retaliation will also raise costs for domestic producers, and lower import prices in the process.
“The decline in import duties reduces the other negative impact of trade on the overall GDP enough to avoid a recession, but it still produces a period of extended stagnation in 2025 and 2026,” said Ercolao.
Since the Canada-United States-Mexico Agreement came into force in 2020, trade between Canada and the US has increased by 46%, according to the Toronto Region Board of Trade.
With that deal up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must work effectively with the Trump administration to preserve and strengthen our bilateral economic relationship.”
“With daily trade of $3.6 billion, Canada and the United States are our closest global partners. The safe and efficient flow of goods and people across our border … remains critical to the economies of both countries,” he said in a statement.
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