The Conference Board of Canada’s analysis, titled “The True Cost of Trump Tariffs: Provincial Impacts,” examines the projected economic consequences of the U.S. imposing 25% tariffs on Canadian imports, with Canada enacting retaliatory measures. The study anticipates significant impacts on Canada’s economy, with variations across provinces.

National Economic Impacts:

• GDP Decline: A projected 1.3% reduction in national GDP for the second quarter of 2025, primarily due to decreased consumption and exports.
• Inflation Increase: An expected rise in inflation by 0.7 percentage points above baseline in the same quarter.
• Trade Reduction: Exports are forecasted to drop by 8%, notably with a 57.4% decline in motor vehicles and parts exports. Imports may decrease by 6.5%, largely affecting motor vehicles and parts, as the North American automotive supply chain faces disruptions.
• Consumer Spending: Household spending is anticipated to fall by 0.9%, with durable goods experiencing a 1.5% decline.
• Business Investment: A 2.8% decrease in business investment is expected, as companies delay spending amid uncertainty.
• Employment: The labor market could see a reduction of approximately 136,770 jobs in the quarter, raising the unemployment rate to 6.9%.

Provincial Impacts:

• Alberta: Projected GDP decline of 1.4%, influenced by weaker engineering construction related to resource projects and spillover effects to the finance and professional services sectors.
• Saskatchewan: Anticipated 1.4% GDP reduction, driven by expected downturns in the oil, potash, and agriculture sectors, along with their support industries.
• Ontario: Forecasted 1.4% GDP decrease, with the large manufacturing sector, especially the automotive industry, being heavily impacted due to its reliance on U.S. markets.
• Quebec: Expected 1.2% GDP decline, with key industries such as aerospace, primary metals, and truck manufacturing among the most affected.
• Nova Scotia: Projected 0.7% GDP reduction, with industries like tire production and fishing, which depend on U.S. processors, being notably impacted.

The analysis underscores the extensive economic ramifications of the proposed tariffs, highlighting the interconnectedness of the Canadian and U.S. economies and the potential for widespread disruptions across various sectors and provinces.

Reference

The True Cost of Trump Tariffs: Provincial Impacts