The game of commercial tariffs and counter-tariffs is generally one that only produces losers. But there is a trade that we don’t often think about where the United States has a juicy trade surplus and where Canadians could have their own personal responses to Trump’s tariffs without harming their own economy: travel.
Canada has been agitating and working for weeks to determine how it will respond to the trade tariffs that the former and future American president promised would be imposed on Canadian exports to the United States.
One of the strategies put forward is to try to bring the tenant of the White House to his senses by making him understand how the two economies are closely intertwined with each other to the point where tapping on the One is equivalent to hitting the other as well.
Unilateral US tariffs of 25% on all Canadian goods would result in a real annual economic cost equivalent to CA$1,300 per person in Canada and US$800 (CA$1,150) in the United States, estimated in November the Canadian Chamber of Commerce. This bill would be increased to CA$1,900 and US$1,300 (CA$1,870) respectively if the desire to take equivalent reprisals came to Canada.
Another Canadian strategy is to try to capture what exactly the Republican president-elect is seeking in order to deliver gains without him having to go down the trade war path. This is what prompted, for example, the federal and provincial governments to quickly announce all kinds of measures aimed at responding to its criticisms of the lack of border controls.
And then, as the first two strategies may not be enough, Canada takes inventory of its own commercial weapons at its disposal to respond to possible American aggression and encourage Washington to change its approach.
After a few weeks of marching in disjointed order, Ottawa and the provinces now present a more or less united front in terms of possible commercial reprisals. “Everything is on the table,” they said in unison on Wednesday, with the exception of Alberta.
Everything, that is to say, not only to impose its own tariffs on imports of American goods into Canada, but also the possibility of taxing, limiting or interrupting its own exports to the United States in the sectors key sectors of oil and gas, electricity, potash, aluminum, uranium and critical minerals.
Where it hurts
It was reported Friday that the Canadian response to possible US tariffs of 25% would be in two stages. A first round of customs counter-tariffs amounting to 37 billion which would be followed, if that is not enough, by a second round of 110 billion potentially more damaging for the Canadian economy.
The first salvo will probably target American exports from regions dear to the heart of the president-elect and the Republican camp. This is what Canada — and Mexico, and Europe, and China — did when President Trump’s first version attacked foreign imports of steel and aluminum. Canada had imposed the equivalent of $16.6 billion in trade tariffs, not only on imports of American steel and aluminum, but also of orange juice and pleasure boats from Florida, bourbon and playing cards from Kentucky or washing machines, toilet paper and candles from Ohio. But this will unfortunately not fail to have an impact on their prices paid here.
-However, there is no reason for us to be, like Donald Trump, fixated solely on trade in goods. It is true that the Republican leader perhaps does not want the world to notice that his country is showing, not a deficit, but a surplus in trade in services which amounted to US$280 billion in 2023, according to the department. American Commerce.
This figure is certainly much lower than reality, said a study by the Center for Future Work at the beginning of last week. Intra-company exchanges of multinationals are notoriously poorly documented. As are the activities of economic sectors dominated by the United States, such as data sales, audio and video streaming or e-commerce.
The suitcase penalty
Official American statistics, which are a little less incomplete than the others on this subject, report that the United States sold more than US$86 billion worth of services to Canada in 2023 and bought almost US$54 billion worth of them from Canada. that is to say a trade surplus of 32 billion.
However, more than a third (36%) of this surplus, or 11.4 billion, came from the travel sector alone, with almost 22 billion spent by Canadian visitors to the United States, compared to 10.5 billion spent by American travelers to Canada.
It must be said that, according to the American Department of Commerce, Canadians are, by far, the foreign visitors to visit their neighbors in greater numbers, at the rate of 20.5 million entries in 2023, compared to 14.5 million visitors from Mexico, 12.5 million from Western Europe or 8.2 million from Asia.
The last time Statistics Canada looked at the issue, ten years ago, Canadians’ spending and number of nights in the United States were ten times higher than in Mexico, their second favorite foreign destination. Next came the United Kingdom, France, Cuba and the Dominican Republic.
The same year, Statistics Canada looked at which places in the United States Canadian travelers like to put their suitcases the most. The state which was then at the top of the ranking – and which must still be there – was Florida, well ahead of those of New York, Washington, California, Nevada, Michigan and even Maine. Unsurprisingly, the travel industry was on 4e Florida employer in 2022 with more than 1 million workers.
Also, Canada may well, once again, impose tariffs on imports of orange juice and pleasure boats from Donald Trump’s adopted state to try to put pressure on him. But Canadians who would like to express their dissatisfaction could also choose to go to Mexico or Cuba this winter, and to explore destinations other than the United States during the summer vacation.
