Gantry cranes sit idle as cargo containers are stacked at Fraser Surrey Docks, in Surrey, B.C., on Nov. 4.DARRYL DYCK/The Canadian Press
In the eyes of president-elect Donald Trump, tariff is “the most beautiful word” in the dictionary. Countries that trade their goods and services with the United States are unlikely to share that same affinity.
Nevertheless, Mr. Trump has threatened to impose a universal duty on all imports into the country – sometimes on the campaign trail he said the tariff rate would be 10 per cent, other times it was 20 per cent, depending on the speech – in addition to much higher tariffs on imports from China.
What Mr. Trump has yet to make clear is whether the universal tariff would apply to Canada. If it does, Canadian exports are likely to take a hit.
Assuming a broad-based tariff of 10 per cent is applied on goods and services from this country to the U.S., export volumes to America could be reduced by nearly 5 per cent by early 2027, compared with current forecasts, according to a recent note by TD Bank economist Marc Ercolao.
The tariffs would come at a particularly sensitive time for Canadian exporters. Exports to the U.S. did rise 1.6 per cent month-over-month in September, after a 5-per-cent drop in August. But trade activity has generally been listless over the past year, with exports to south of the border moving sideways on a rolling 12-month basis, despite a surprisingly robust U.S. economy.
Yet at the same time, Canada hasn’t been this dependent on the U.S. as a trading partner in years. In recent months Canadian merchandise exports to the U.S. have climbed to around 77 per cent of total exports, a level not seen since 2006.
It’s all setting Canada up for a trying period ahead as businesses and politicians brace for an unpredictable future with Mr. Trump back in the White House.
Decoder is a weekly feature that unpacks an important economic chart.