Trump's Tariffs Threaten Canada's Economy, Former Trudeau Advisor Warns — A Ally's Plea for Reciprocity After Centuries of Cooperation

Canadians and Americans have fought together on fields ranging from Vimy Ridge to Kandahar. However, they are now preparing for an economic conflict with one another.

Canadian economist Mike Moffatt is raising concerns about the potential collapse of this 150-year-old partnership as President Trump's tariffs alter perceptions among Canadians.

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"I believe it's due to a mix of being wounded and furious," stated the previous adviser to ex-Prime Minister Justin Trudeau during a recent episode. The Prof G podcast.

He cautioned that the trade war might severely damage the Canadian economy and simultaneously impose significant expenses on typical American citizens by reducing America’s diplomatic influence.

Financial burdens for each side

Similar to a deteriorating relationship, a trade war causes harm to all parties involved, with none emerging completely untouched.

On the Canadian front, the Bank of Canada projects that the trade conflict might reduce GDP growth by up to 3 percent during the initial year.

It would essentially resemble the 2008-09 financial crisis in this region," Moffatt stated. "However, unlike what happened in '08-'09, it would primarily stem from inflation instead. This situation somewhat mirrors the pandemic scenario where we experience an economic downturn similar to that during the financial crisis but without facing the same level of price decreases.

The turmoil has likewise altered how Canadians view their counterparts in the south. A recent survey indicates this shift. Leger Poll shows that 27% of Canadians view the U.S. as an "enemy," marking a significant increase from only 4% in 2020, according to the data. YouGov .

Americans are also preparing for potential economic repercussions. Atlanta Federal Reserve Bank Recently revised its first-quarter 2025 GDP growth forecast from around 3% down to -2.4%. In contrast, a study by the Institute for International Economics at Peterson suggests that the typical American family might incur an extra $1,200 in expenses because of the trade conflict. This projection includes the potential balancing effect of the expected tax reductions under Trump’s plan yet does not include the influence of retaliatory tariffs imposed by other countries.

An instance of such counteractions is a suggested 25% tariff on electricity exported to New York, Michigan, and Minnesota from the Canadian province of Ontario, which could result in increased power costs for U.S. households.

As of this writing, the Trump administration has postponed various tariffs on Mexico and Canada until April 2. Nonetheless, regarding Canada’s reciprocal tariffs stay in place. In this unstable and unforeseeable economic climate, both consumers and investors should implement measures to safeguard their financial well-being.

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Protect your finances

Given the unpredictability surrounding the duration and intensity of this trade conflict, households ought to adopt preemptive strategies to strengthen their economic standing. Revise your weekly or monthly budget to factor in possible cost hikes and think about scaling down discretionary expenditures. Lowering debts could further bolster your financial durability.

Closely monitor your sector because trade barriers could alter the job market. Various car manufacturers and food distribution companies might be affected. freight companies and liquor producers have already begun layoffs.

Creating an emergency fund that covers three to six months' worth of living costs can serve as a vital safeguard, especially for individuals employed in sectors heavily reliant on exports.

These monetary strategies will assist in managing the current economic upheaval and simultaneously set you and your loved ones up for enduring security—regardless of changes in global politics.

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The content of this article serves solely as information and should not be interpreted as professional advice. No warranties of any sort are offered with this material.