Donald Trump has just regained the keys to the White House. Among them, a key with serious consequences for Canada: one that could block our trade.
For days, we have feared that he would use it to impose tariffs of 25% on our exports from day 1 of his presidency. Last night, he mentioned the date of February 1 for their entry into force. A respite? More of an uneasy truce.
The key is therefore within reach, ready to turn at the slightest whim. If “Tarrif Man” takes action within two weeks, the entire Quebec economy could falter.
Aluminum, aerospace, automobiles: pillars of our prosperity would collapse under the weight of these tariffs. According to the Legault government, at least 100,000 jobs are in danger.
Faced with this danger, Canada resembles a squirrel protecting its nuts from an American grizzly bear. Our dependence is blatant: three quarters of our exports end up in the United States.
And the worst? Our economy, too focused on consumption and real estate, sorely lacks the tools to survive a major trade war.
The chaos
The Bank of Canada predicted it in 2019: a tariff of 25%, and a guaranteed recession. GDP would fall by 6%. This would not be just an economic storm. It would be a tsunami.
The crisis would surpass all previous recessions except the temporary shock of the pandemic. Exports in free fall, Canadian dollar in disarray, frozen investments, paralyzed job market: widespread economic chaos.
And that’s not all. According to the Canadian Federation of Independent Business, 65% of SMEs would raise their prices to survive. Already find your grocery basket too expensive? Prepare for worse.
Dangerous game
So what to do? The Trudeau government plans to respond with reciprocal tariffs. The idea is tempting: a blow for a blow, an eye for an eye, a tooth for a tooth. But it would be a dangerous game.
-Each tariff would trigger a cascade of additional costs for Quebecers. Orange juice, construction materials, cars: everything would become more expensive. An infernal spiral.
With public finances weakened by years of excessive spending, Ottawa would have difficulty supporting sectors in crisis.
Some experts are proposing bold solutions: reducing taxes, reducing trade barriers between provinces, investing in innovation. Great ideas, but far from being immediate remedies.
The Chinese lesson
China opted for a different strategy during Trump’s first term. To calm its enthusiasm, Beijing had promised to massively purchase American agricultural products. A tactic that saved time, even if not all commitments were respected.
Canada could take inspiration from it. Why not promise to buy more military equipment, trains or planes made in the United States? This kind of concession would allow Trump to declare a “victory” while defusing tensions.
The price of inaction
Our leaders lacked vision. For more than a year, Trump’s re-election seemed likely. However, instead of preparing, several elected officials preferred to look away.
They bet, wrongly, on a re-election of Joe Biden, banking on a continuity that never happened. Justin Trudeau, by recently describing Trump’s victory as a “setback”, has only worsened already fragile relations with Washington.
Meanwhile, no proactive measures have been put in place to protect our industries, our jobs and our purchasing power.
If Trump turns the key, he will lock the padlock on our trade. And for now, Canada is still looking for its double.
