Up Next In Trade Wars: U.S. vs Canada

Since Trump has become the POTUS, he has been stirring up trouble all over the world, even with the peaceful neighbours next door. During the election, Mr. Trump pledged to renegotiate NAFTA with Canada and Mexico. The United States’ trade war with Mexico has barely begun and there may be another potential trade war with Canada arising.

It is understandable that Trump wishes to protect American benefits by increasing tariffs on imports, but the effect of these actions from economists’ perspective could be fatal. For Canadians, tariffs and regulations imposed by their largest trading partner will disrupt the economy. For Americans, prices will increase which will in turn cause Canadian imports to decrease, thus leaving American consumers with less choices and higher prices.

Besides trade, the American and Canadians (“Snow Mexicans”) also have different views on immigration. While the Canadians continue to encourage immigration and refugee support, the Americans fear the refugees will illegally cross the low security Canadian and American border. There have been whispers of the construction of another wall between the US and Canada. Despite the pressure from the South, Canadians remain loyal to their belief and morals. Most of the Canadian population support Trudeau as his opinion reflects theirs. A day after Trump put a temporary four-month ban on refugees coming into the United States and barred travellers from the seven countries, Trudeau tweeted:

Mr. Trump’s pledge to renegotiate NAFTA is not sitting well with most Canadians. Some polls also found that 58 percent of Canadians would support a trade war with the US in order to protect their economic interest and national pride.

A real trade war would lead to many disastrous results as restricted trade is against most countries’ economic interests. Also, America is Canada’s most ideal trading partner given the location, consumers and economic stability. However, this trade war could lead to some positive results. Besides gaining pride, Canada will also have the opportunity to form more trade bonds with other countries like China once their options from US are restrained. In theory, diversifying trade can help create a sustainable and healthier future for the economy of Canada.

If Canada were to form strong trading bonds with China, they would gain a lot of opportunities to purchase advanced and valuable technology. Therefore, the real winner of the war would be China. To be honest, the chances of this trade war occurring are small. A more likely case would be Canada maintaining the US relations, but also cultivating a stronger relationship with China at the same time.

For more information, go to the Global and Mail, Maclean’s or the Guardian.