Posthaste: Hope dims that Canada can escape the next round of Trump tariffs unscathed

U.S. President Donald Trump’s rather erratic approach to trade policy once left room for hope that maybe his tariff threats were just that — threats — but as the April 2 deadline nears a harsher outlook is setting in.

“Canada has borne the brunt of President Trump’s tariff action despite having one of the most equal trade relationships of any country,” said economists at TD Economics.  “This leaves us skeptical that tariffs can be avoided no matter the negotiation tactic.”

And the deadline is ticking down. Trump has said his month-long exemption on blanket tariffs for goods covered by the Canada-U.S.-Mexico Agreement (CUSMA) will run out April 2. That same day his administration plans to announce “reciprocal” tariffs on all countries.

Toronto Dominion forecasts that Trump will levy widespread tariffs on most of America’s trading partners in April, raising the effective tariff rate from the existing 2.5 per cent to 14 per cent.

For Canada, TD expects the average tariff rate for exporters to the U.S. will rise to 12.5 per cent and remain there for six months, before easing to 5 per cent through negotiations.

“However, even with this, we doubt Canada’s trade and tariff relationship will return to the pre-Trump state,” they said.

Once a new CUSMA deal is reached, TD forecasts the average tariff rate will fall to 2.5 per cent, higher than before Trump came to power.

The impact of this disruption will pull Canada into a “shallow” recession this year, eased by government support and less severe than a typical recession, the economists said.

The tariffs will further slow Canada’s housing market, and the pressure will build as the price of building materials rises because of retaliatory tariffs and a weaker Canadian dollar.

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