The economic relationship between Canada and the U.S. is facing a historic shift under the Trump administration’s new trade policies. In his discussion paper Canada at Trade War, economist Dan Ciuriak outlines the threats Canada faces from punitive tariffs, economic coercion, and protectionist policies – and how Canada must adapt and thrive in this new era.
Key Insights from the Paper:
Canada is not as dependent on U.S. trade as Trump claims – the trade relationship is two-way, with the U.S. relying on Canadian resources like oil, lumber, and essential goods.
Trump’s “America First” trade policy is reshaping global trade – it prioritizes domestic manufacturing and uses tariffs to force compliance.
The economic impact on Canada could be severe, potentially leading to a 2-3% GDP decline, investment losses, and de-industrialization.
Canada must respond proactively by:
- Diversifying trade ties (e.g., joining the European Single Market or forming a North Atlantic Free Trade Area).
- Strengthening internal trade and boosting infrastructure to reduce reliance on U.S. supply chains.
- Modernizing defense, innovation, and industrial policy to support economic resilience.
- Expanding the social safety net to protect workers from economic disruptions.
Canada must move quickly to adjust its trade policies, support domestic industries, and strengthen its economic independence.
🔗 Read the full paper on SSRN: Canada at Trade War by Dan Ciuriak :: SSRN
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