After Donald J. Trump’s inauguration as president on Monday, Canadians will soon find out if he plans to follow through on his threat to impose immediate 25 percent tariffs on exports from Canada to the United States. Many Canadians are eager to see how the federal government will respond to any American trade actions. Matina Stevis-Gridneff, the Canada bureau chief, predicts that Canada’s response will mirror its reaction to previous tariffs imposed by Mr. Trump, focusing on goods from Republican or swing states to target Trump allies. However, due to the size of Canada’s economy, the country may not be able to inflict the same level of damage as the United States, raising questions about the effectiveness of retaliation.
Looking back at a trade war between Canada and the United States in 1930, the impact was significant. The Smoot-Hawley Tariff Act raised U.S. tariffs, leading to a decline in Canadian exports and a negative impact on the Canadian economy. Prime Minister William Lyon Mackenzie King responded by matching some of the U.S. tariffs on select products, but ultimately, the trade war had lasting effects on Canada.
Despite efforts to mitigate the impact of tariffs through trade agreements with Britain and its colonies, the 1930s trade war had long-lasting consequences for Canada. Today, as Canada faces the possibility of another trade war with the United States, there are concerns about finding alternative markets and absorbing the impact on exports.
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