Trump’s 25% tariff would mean recession for Canadian economy next year, economists warn

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🗞️ Driving the news: Economists warn that President-elect Donald Trump’s proposal of a 25% tariff on Canadian and Mexican imports could trigger a Canadian recession in 2025
• The policy threatens to slash Canada’s GDP by 2.6%, equating to a $2,000 annual loss per citizen, while disrupting critical industries like energy, agriculture, and auto manufacturing
• Experts believe the tariff could also fuel inflation across North America, complicating monetary policy

🔭 The context: Canada’s economy heavily relies on trade with the U.S., with $960.8 billion in bilateral trade in 2022, including energy exports that account for one-third of the total
• Trump’s prior campaign promised a 10% tariff on imports, but this new proposal raises the stakes
• Analysts fear that the threat alone could stall investments and destabilize cross-border supply chains crucial to sectors like automotive manufacturing

🌍 Why it matters for the planet: Tariffs on energy products may hinder Canada’s ability to export cleaner fuels to the U.S., potentially increasing reliance on less sustainable energy sources
• Additionally, the economic strain could shift focus away from renewable energy and sustainability investments, as industries and governments prioritize short-term survival

⏭️ What's next: Canada will likely seek to negotiate exemptions or alternative solutions while bracing for the policy’s potential implementation
• Businesses across North America, particularly in the auto and manufacturing sectors, are expected to lobby strongly against the tariffs
• Policymakers will need to address inflation risks and protect vulnerable industries to mitigate the economic fallout

💬 One quote: “A 25 per cent tariff, I think, would shut down the auto industry in this country if it were to apply and be permanent” – Pedro Antunes, Chief Economist, Conference Board of Canada

📈 One stat: A 25% tariff could reduce Canada’s GDP by 2.6% annually, equivalent to $2,000 per person

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