To Retaliate or Not: That Is out of the Question

 - An Independent Perspective on the Intensified Canada-US Trade War

 

  (Picture from Sean Kilpatrick, the Canadian Press)

Abstract: Several things have happened at the same time. The Trump administration has begun to levy 25% tariffs on imports from Canada on and off; despite the present complicated and changing environment, Bank of Canada has decided to lower the interest rate again; the Liberal Party has chosen a new leader, Mark Carney, with a brilliant educational and career background. The Federal election of Canada is scheduled to happen in late April 2025. There are actually three policy pillars  for the present Trump administration: 1) Reduction of government expenditures will reduce the federal government deficit from 7% of GDP to 3% by 2028; 2) Government deregulation on banking and business activities will inject more energy into small and medium-sized businesses; 3) The tariffs on foreign goods will penalize those businesses who still remain on the foreign land and get them to return their manufacturing business so as to revitalize the domestic economy and reduce the cost of living. Faced with tariffs imposed by U.S. President Donald Trump, some countries have, so far, responded by turning the other cheek, and not retaliating with their own duties. The Canadian economy may be better off helped by removing interprovincial trade barriers and untangling the red tape hampering some of Canada's trade agreements with other countries. Even with retaliation, federal officials have the experience to tariff imports like liquor that can be replaced by Canadian producers. For example, it would be a really bad idea to slap tariffs on U.S. imports that Canada really relies on, like pharmaceuticals. Canada needs to wake up from its reliance on the US before it is bound with arms tied behind the back as Canada has got fewer and fewer friends from some of the important countries like China, India, Saudi Arabia and so on. Canada is presently a resource-based economy with its strengths on oil and gas. Therefore, Canada should subsidize the oil and gas industry to be able to take off to a higher altitude, instead of taxing the resource industries and rewarding the green industries. Canada should also learn from the US and divert from high government expenditures, high deficits and high regard for environmental protection. Currency devaluation and interest rate decrease can be considered ways to cushion the tariffs effects. However, the Chinese experience has told us devaluation won't have a lasting improvement on the trade balance, and it has had little impact on the dollar price for Chinese exporters. According to US government data, 17% of US exports go to Canada. More than 75% of Canada's exports go to the US. Canada stands to suffer a larger economic blow in any trade war with the US. Now it is a critical moment for the Canadian economic future as well as its unity as a country. With all the theories and cases discussed above, Canada should take the third option as put by Mitchell Sharp in the 1970’s, avoid direct conflict with the Trump administration, delay the tariffs as long and as much as possible, solve its internal problems, redirect its oil and gas to the European market, its agricultural and lumber products to the Asian market and buy from both Europe and Asia what it used to buy from the US. In this way, the harm in tariffs will be reduced to the greatest extent and the Canadian economy will also be restructured successfully.

 

Key Words: Canada-US Trade, Tariffs, Retaliate, Devaluation, Diversification

 

This era is an era of information explosion. While one is able to obtain much more information, one needs to identify genuine information, sort it out and abstract the useful part. Several things have happened at the same time. The Trump administration has begun to levy 25% tariffs on imports from Canada on and off; despite the present complicated and changing environment, Bank of Canada has decided to lower the interest rate again; the Liberal Party has chosen a new leader, Mark Carney, with a brilliant educational and career background, yet endorsed by Justin Trudeau.

Canada continues to hit back in the trade war with its neighbour to the south. But it also raises the question of whether Canada absorbing the blows from U.S. tariffs, while painful, might be preferable to the overall economic damage from a full-scale trade conflict. Faced with tariffs imposed by U.S. President Donald Trump, some countries have, so far, responded by turning the other cheek, and not retaliating with their own duties. Pau S. Pujolas, an associate professor or economics at McMaster University, says he believes Canada doesn't need to spend its time "fighting tariff with tariff." He says the economy would be better helped by removing interprovincial trade barriers and untangling the red tape hampering some of Canada's trade agreements with other countries. He continued, “let the Americans shoot themselves in the foot, let them destroy their firms … that rely on Canadian products, let them destroy all that. And let's move on." Professor Antweiler of UBC said, "we're looking at sectors where we have easy domestic substitutes, or third country substitutes." He emphasizes that it is all really focused on harm reduction. As mentioned by another expert, even with retaliation, federal officials have the experience to tariff imports like liquor that can be replaced by Canadian producers. For example, it would be a really bad idea to slap tariffs on U.S. imports that Canada really relies on, like pharmaceuticals[1]. Canada needs to wake up from its reliance on the US[2] before it is bound with arms tied behind the back as Canada has got fewer and fewer friends from some of the important countries like China, India, Saudi Arabia and so on.

My Asian friend would like to cite the famous seven-step poem by Zhi Cao in the warring state period of China (220-280 AD), and the poem reads: a kettle had beans inside, and stalks of the beans made a fire; when the beans to the brother-stalks cried, “we sprang from one root, why such fire?”[3] Many countries are panicked with Trump’s tariffs, yet they do not know how to cope with them. The writer will here give a detailed analysis of the situation, the problems, the reasons, some alternative measures and recommend an adoptable solution.

 

I.                   Examples of Basic Logic and Sketch of Canada

Many people in Saskatchewan like fishing, and the lakes will tend to be frequented in the summer. While one is occupied in fishing, some people may disturb the fish with their voices or action, what is he expected to do? When one is in a soccer game, he will often be tackled, what will he do in such situations? When one plays chess with others, one person has violated against the rules, will he follow suit, try to sort it out using a judge, or quit from the game?

A story may reveal the whole situation. Village A is rich with freedom and democracy, and Village B is poor with a little authentic governance structure but many hard-working villagers. A talented baker opened a bakery in Village A, and his cakes and bread were very popular. When the bakery has too much bakery to sell, it wanted to sell it in Village B. The chief of Village B would not let it unless the bakery had a branch at Village B and unless that the bakery sold to Village B is a just a small portion of their production. So the bakery did open a branch there, and it turned out it was even more successful than the original one. This happened with other stores also when many businesses went to Village B to open branches. Gradually those businesses in Village A became deserted, and Village B began to levy tariffs on products and services from Village A so that the business in Village A will be protected. When the Chief and seniors of Village B heard about it, they were so angry that they also levied tariffs back to products and services from Village A. The result is both villages have higher prices, and production is not as easy as before. The tariffs seem not working except for that everything is pricier and that production and consumption are deterred. The author thinks the tariff works better if it is for a structural adjustment. For example, a tariff on oil and gas from the US will protect the oil and gas industry in Canada so that Canadian oil and gas is more competitive in the US.

Canada is presently a resource-based economy with its strengths on oil and gas. While it aims at developing the data and AI technology, it has a long way to go. Therefore, Canada should subsidize the oil and gas industry to be able to take off to a higher altitude. However, the Liberal Party’s leader would like to continue the path of Justin Trudeau and tax the resource industries[4] and reward the green industries, which is against Canadian economic nature. Moreover, Canada is on a high-speed train in a wrong track with high government expenditures, high deficits and high regard for environmental protection, which the US is now trying to divert from lead by President Trump.

In the past the Liberals have blocked resource projects, raised taxes, driving many jobs south into the hands of the Americans. A half a trillion dollars of investment has fled Canada. They have also blocked a pipeline that would have allowed Canada to go around the American market, and they’ve killed LNG liquefaction plants, forcing Canada to sell all of our natural gas to the Americans at huge price discounts. If we want a leader to stand up to Trump and grow the economy, it is evident that the net-zero policy should be given up.

As a matter of fact, the premier of Alberta Danielle Smith says that there would be a referendum for all Albertans if the Federal government cannot move on 9 issues like dropping the emission cap, giving up the net-zero policy, stopping the unfair transfer system and so on in 6 months[5].

 

II.                Principles of International Trade

I a primitive society, people barter. Later the currency is discovered and used in the exchange. Further later, people have found that they don’t have to produce all the products they need, and that is when division of labor is created. However, the most important are comparative advantage and economy of scale in international trade. With comparative advantage, both countries will fare better if each focuses on one product that it has comparative advantage. With economy of scale, both reduction in cost and efficiency will be achieved. Therefore, it is not if you want to opt out of international trade, but it is whether you want to take advantage of the two advantages.

 

III.             Present Trade War Situation

As the case is very complicated, the writer will use a chart to illustrate the present trade war situation.

 

Imposed by	Imposed on	Date	Type of tariff	Amount	Status
USA	Canada	04-Mar	All goods imported from Canada (Excl. energy)	25%
USA	Canada	04-Mar	Energy products	10%
Canada	USA	04-Mar	Retaliatory (1) on $30-billion worth of U.S. goods	25%
USA	Canada	06-Mar	Non-CUSMA goods (Excl. energy, potash)	25%
USA	Canada	06-Mar	Energy products not covered by CUSMA	10%
USA	Canada	06-Mar	Potash products not covered by CUSMA	10%
Canada	USA	10-Mar	Surtax on electricity exported from Ontario to U.S. states	25%
USA	Canada	12-Mar	Steel and aluminum	25%
Canada	USA	13-Mar	Retaliatory (2) on $29.8-billion worth of goods	25%
China	Canada	20-Mar	Retaliatory tariffs on canola oil, canola meal and pea products	100%	Pending
China	Canada	20-Mar	Retaliatory tariffs on seafood and pork	25%	Pending
USA	Canada	02-Apr	Reciprocal to address all Canadian tariffs, taxes and non-tariff barriers on the U.S.	TBD	Pending
Canada	USA	02-Apr	Retaliatory (3) on an additional $95-billion worth of U.S. goods	TBD	Pending
Source: Jane Switzer: Tariff tracker: Confused by the trade war? Here's where things stand today, Financial Post, 14 Mar 2025, with the link https://financialpost.com/news/economy/tariff-tracker-u-s-canada-trade-war-updates.

 

The bilateral trade relationship between the United States and Canada is one of the world's largest. In the first nine months of 2024, Canadian government data estimated that CA$800 billion (US$550 billion) of goods crossed the Canada–U.S. border. The countries' energy and automotive markets are both highly integrated, and Canada is the U.S.'s largest supplier of steel. As of November 2024, the U.S. government estimated the United States' trade deficit with Canada to be US$55 billion. This deficit is largely driven by American demand for Canadian oil; when oil exports are excluded, the U.S. has a trade surplus with Canada. Roughly 60 percent of oil imported by the U.S. is sourced from Canada, and Canada is the largest supplier of U.S. energy imports and second-largest recipient of U.S. energy exports. The increased value of U.S. imports from Canada is partially a result of the Russian invasion of Ukraine in 2022, which created global market instability and raised energy prices. Trump said the tariffs are intended to reduce the U.S.'s trade deficit with Canada and force Canada to secure their borders with the U.S. against illegal immigration and the illegal smuggling of fentanyl analogues. Trudeau and Sheinbaum of Mexico called the U.S. tariffs unjustified. Trudeau suggested that Trump intends to use tariffs to force Canadian annexation into the United States; Trump has explicitly confirmed this point several times. Both Canada and Mexico said that U.S. tariffs violate the USMCA, a free trade agreement ratified by the three countries in 2020 during Trump's first presidency. Economists have said the tariffs would likely disrupt trade between the three countries, upending supply chains and increasing consumer prices across North America[6].

 

 

IV.             Problems Caused

 

Many economists have expressed skepticism over the effectiveness of Trump's strategy in imposing tariffs, and many have said that increased tariffs would raise the prices of consumer goods in the U.S. and worsen the country's cost-of-living crisis. The Budget Lab at Yale University estimated that the tariffs would lead to a loss of about US$1,200 in purchasing power for the typical American household[7]. Because the United States does not produce enough oil to satisfy its demand, 10 percent tariffs on Canadian oil and energy will likely lead to an increased oil price across the United States. This is especially true in the Midwest, a region heavily reliant on oil imported from Alberta. The Canadian government had previously said that U.S. gas prices could increase by US$0.75 per gallon overnight if tariffs were imposed. Tariffs could also increase the cost of electricity in some U.S. states, especially those that rely on Canadian provinces like Ontario, Quebec, and British Columbia for energy[8]. Reported on February 11, 2025, in the Wall Street Journal ---“The real goal of US steel and aluminum companies in 2018 wanting tariffs was to boost their bottom lines --- allowing them to charge more. A sample outcome --- General Motors profits dented by a billion dollars equal to the pay of more than 10,000 employees”[9]. In February following Trump's initial announcement, Canadian travel to the United States dropped by 40 percent compared to February 2024[10]. One prediction is that the shift in Canadian travel away from the US could amount to a loss of $4 billion for the US economy[11].

 

The Canadian economy could enter a recession within six months if the tariffs are maintained[12]. According to the Conference Board of Canada, in the second quarter, GDP is expected to be down 1.3 per cent, driven by weaker consumption and lower exports, and inflation is to increase by 0.7 points above the baseline in the quarter[13]. Quebec premier Legault said that the U.S. tariffs could cause the loss of as many as 100,000 Canadian jobs within the province[14]. Over the whole country, unemployment rate will spike to 6.9 per cent (please see Note 8). Prices could also increase in Canada for even domestically produced products, especially if the tariffs cause economic difficulties for smaller businesses, due to the spill-over effect and the rational expectations.

 

There may also be a considerable change in population. While many Canadians want to strip Elon Musk of his Canadian citizenship[15], China is trying to win him over as a Chinese resident or citizen. While many Canadians want to fight against the US, and start boycotting on American goods, some other Canadians may want to vote for leaving Canada by their feet. What is worse, in March 2025, the Trump administration announced that beginning on April 11, 2025, Canadians who enter the US for a visit of more than 30 days will need to be fingerprinted and registered[16].

 

In the United States, Trump's initial decision to impose tariffs on Canada and Mexico was criticized by the editorial board of The Wall Street Journal, which said that his "justification for this economic assault on the neighbors makes no sense" and that Trump had begun "the dumbest trade war in history"[17]. The Economist described Trump's tariffs as aggressive and erratic, and said that they would "cause lasting damage at home and abroad"[18]. Actually, Trump's imposition of tariffs on Canada and Mexico violated both the USMCA and the rules of the World Trade Organization, of which all three countries are members[19].

 

In a word, this will be a lose-lose result, which is bad for everyone.

 

V.                Case Analysis

 

When we take a look at a similar tariff case between China and the US about 7 years ago[20], we may gain some insights of what we may experience today.

 

Amiti et al. (2019) discuss the short-term macroeconomic impact of U.S. tariff increases since January 2018 through September 2018, noting that the tariff increases have led to increases in the prices of the products in question ranging from about 10% to 30%, and that because the elasticity of world real prices with respect to U.S. tariffs is near zero, the U.S. has not been able to lower world prices through tariffs in order to make the U.S. share the impact of tariffs with other countries. Because the elasticity of world prices to U.S. tariff increases is close to zero, the United States has not been able to reduce world prices by imposing tariffs in a way that would allow other countries to share in the impact of the tariffs. Most of these tariffs are borne by U.S. consumers and importers. U.S. consumers experience a $1.4 billion monthly decline in real income as a result of the tariffs, while the U.S. government is the beneficiary of the tariffs. At the same time, the tariffs have led to a contraction in U.S. demand and a trade diversion effect, with an estimated $165 billion in trade diverted annually as a result of the tariffs. Fajgelbaum et al. (2020) also conclude that tariffs not only reduce U.S. aggregate welfare in aggregate, but they also have a large impact on the distribution of wealth within the United States. In particular, U.S. consumers and importers bear the brunt of the tariffs, with the price transmission effect of tariffs reducing their welfare by $51 billion, while the government's total revenue level rises, with tariffs boosting government revenue by $34.3 billion.14 The study also concludes that if China adopts a tariff countermeasure, it will have a significant impact on the distribution of wealth in the United States. Further, the U.S. net welfare loss is higher if China takes tariff countermeasures than if China does not.

 

Hanson (2020) examines the structure of U.S.-China trade and concludes that tariffs do not contribute to the growth of manufacturing employment in the U.S. After estimating the tariff burden, Handley et al. (2020) note that the implicit tariff burden per U.S. worker is $900, with the burden on manufacturing workers being as high as $1,600 per person.

 

Lianbiao Cui et al. (2018) used a multiregional CGE model to simulate the trade diversion effect of trade friction between China and the United States, and the results show that direct trade between China and the United States will be reduced significantly, but indirect trade will increase significantly. U.S. trade sanctions cannot effectively solve its trade imbalance problem, and the shrinking of the U.S. trade deficit with China will be replaced by other countries. Research by scholars such as IMF Chief Economist Gita Gopinath points out that higher bilateral tariffs will not reduce the overall trade imbalance because their main effect is to shift trade to other countries. Instead, higher bilateral tariffs could undermine the economies of China and the United States and global growth prospects by weakening business confidence and investment and disrupting global supply chains, while raising costs for producers and consumers (Adler et al., 2019).Handley et al. (2020) studied that the increase in tariffs on U.S. imports from 2018 to 2019 significantly dampened U.S. export growth, with nearly a quarter of U.S. exporters' imports affected by the added tariffs and the affected firms accounting for more than 80 percent of total U.S. exports.

 

Under China's countermeasures, U.S. exports of rubber and plastic products, non-metallic minerals, metals, and electrical equipment fell even more than in China. If we further consider the dual impact of the Regional Comprehensive Economic Partnership Agreement (RCEP) and China's tariff countermeasures, the decline in U.S. exports in various industries is significantly larger. In the energy sector, Jie Ma and Yue Yuan (2020) argue that the U.S.-China trade friction may lead to the U.S. will lose China as the most important energy consumption market, and the impact of natural gas and solar energy industries is more significant relative to the traditional oil industry.

 

Using the COMTRADE and TRAINS databases with the WITS-SMART model, Lv Yue et al. (2019), based on the two lists of tariff implementations published by China and the United States in 2018, in April and June, found that although China's list of tax increases hit the targeted U.S. industries to a greater extent, China suffered a greater overall welfare loss of about 2.6 times that of the United States.

 

The U.S.-China trade imbalance and the loss of U.S. manufacturing jobs are structural, and tariffs will not help resolve the U.S. current account imbalance, nor will tariffs on Chinese imports help bring manufacturing jobs back to the U.S. At the same time, mutual tariffs and the U.S.-China Phase I of the EITC will have a spillover effect on other developed countries and emerging markets, but the impact of this effect is highly uncertain. In the case of China, the U.S.-China trade war is not only leading to a restructuring of trade between the two countries, but is also reshaping trade ties between Japan and its Asian partners, which is generally favorable to Japan's economic growth. At the same time, the U.S.-China trade war is also conducive to further strengthening trade and direct investment ties between China and Japan.

 

When we looked back at the history in the US, we have found a starting tariff case – the Smoot Hawley Tariff Act case[21].

 

Due to the low market share of domestic businesses and a declining labor market, Senator Reed Smoot and Congressman Wells C. Hawley sponsored a tariff bill in late 1929 that was actually as high as 60%, signed into law by President Herbert Hoover on June 17, 1930, which raised tariffs on more than 20,000 imported goods to the highest level in history. The tariffs set by the bill were the second highest in U.S. history, just below the tariffs of 1828. Following the passage of the bill, many countries took retaliatory tariff measures against the United States, resulting in a 67 percent decrease in U.S. imports and exports during the Great Depression. Economists and economic historians agree that the passage of the Smoot-Hawley Tariff Act was the catalyst that led to the sharp decline in the size of trade between the United States and Europe from an all-time high in 1929 to an all-time low in 1932, and the beginning of the Great Depression. Prior to this, President Herbert Hoover had asked Congress to lower tariff rates, but Congress did the opposite and raised them. Although many economists urged President Hoover to veto the bill, he signed it into law, in part because one of Hoover's many campaign promises when he ran for president in 1928 included raising import tariffs on farm goods to help distressed farmers.

 

James TFG Wood and Ernest Patterson organized a petition signed by 1,028 U.S. economists asking President Hoover to veto the bill. Automobile magnate Henry Ford spent an entire evening at the White House trying to convince Hoover to veto the bill, which he called “a stupid economic policy. J.P. Morgan's chief executive Thomas W. Lamont described him as “on his knees begging Herbert Hoover to veto the stupid Holly Smoot Tariff Act”.

 

In 1930, Canada was the first to impose new tariffs on 16 products, accounting for 30 percent of all U.S. exports to Canada. Canada then began to seek closer economic ties with the British Commonwealth. France and Britain protested and began to develop new trade channels. Germany focused on building a self-sufficient economy. U.S. imports plummeted 66% from $4.4 billion in 1929 to $1.5 billion in 1933, while exports plummeted 61% from $5.4 billion to $2.1 billion, both drops exceeding the 50% drop in GDP over the same period. In 1930, when the Smoot-Hawley Act was passed, the U.S. unemployment rate was 7.8%, but by 1931, it had risen to 16.3% and was on its way up, reaching 24.9% in 1932 and 25.1% in 1933. Also, it was said that the automobile industry decreased by 95%, and Fascism was bred during this trade war. Between 1929 and 1934, the size of world trade shrank by about 66%. Non-tariff barriers became increasingly important in the reconstruction process after World War II. In Japan, for example, the country's effective tariff rate was only 1.6% in 1951, which made it necessary to set up non-tariff barriers to protect domestic industries. in June 1952, Japan announced the “Basic Policy on Foreign Investment in the Japanese Car Market”, which set a limit on the number of cars that could be imported, and a licensing system for other industries, which led to a significant increase in the number of cars imported after World War II. In June 1952, Japan announced the “Basic Policy on Foreign Investment in the Japanese Car Market”, which set limits on the import of cars and a licensing system for other industries, making it impossible for the U.S. automobile and television industries to enter the Japanese market for nearly two decades after World War II.

 

 

VI.             Reasons Explored

 

Why has there been such a big battle? First, there is the issue of illegal immigration and illegal smuggling of fentanyl, as emphasized by Trump. Trump's tariffs initially targeted goods from China, Mexico and Canada. These accounted for more than 40% of imports into the US in 2024.

But Trump has accused the three countries of not doing enough to end the flow of migrants and illegal drugs such as fentanyl into the US. All three countries have rejected the accusations. Secondly, the trade deficits make Trump unhappy (but mostly due to American heavy reliance on Canadian oil and gas from the Canadian side), and he wants to reduce the gap that exists between how much the US imports from and exports to individual countries. Thirdly, the tariffs are also aimed at incentivizing manufacturers to move to the US to make their products there instead of importing them from other countries. As proclaimed from the White House, Apple announced a historic $500 billion investment, which will create 20,000 new U.S.-based jobs. $500 billion private investment was announced in artificial intelligence infrastructure — with major CEOs agreeing it would not have been possible without President Trump’s leadership. TSMC announced an unprecedented $100 billion investment in U.S.-based semiconductor chip manufacturing[22]. Also, the crown prince of Saudi Arabia affirmed the kingdom's intention to broaden its investments and trade with the United States over the next four years, in the amount of $600 billion, and potentially beyond that[23]. Fourthly, those businesses which aim to get around the bilateral tariffs by setting up factories in Mexico or Canada will have to withdraw as the tariffs are multi-sided. Fifthly, by levying tariffs multi-sided there will be a huge fiscal income to be used at hand, and the burden on Treasury Notes will be much less.

 

The three forces of capital in the Trump administration share the same goal of re-industrializing the United States; however, the focus of their respective policy demands differs somewhat, with brick-and-mortar capital pushing for sweeping tariffs, finance capital attempting to balance the contradiction between lowering the dollar exchange rate and maintaining dollar hegemony, and Silicon Valley tech capital focusing on asserting its own dominance of artificial intelligence technology. The main policy drivers within the current Trump administration are still Treasury Secretary Besant and Stephen Miran, the chairman of the U.S. Council of Economic Advisers. According to Stephen Miran, the ultimate goal of Trump's economic policy is the reindustrialization of the United States. But a key obstacle to U.S. reindustrialization is the high exchange rate of the U.S. dollar (and the correspondingly low exchange rate of the Chinese yuan), which has led to a lack of international competitiveness for U.S. goods. In the concept of “Mar-a-Lago Accord” to maintain the hegemony of the dollar, the United States and the world's major economies signed an agreement requiring these economies to convert their U.S. treasury bonds into ultra-long-term (100-year) non-tradable, non-interest-paying special bonds, and then through the Federal Reserve's currency swap agreements with other central banks to safeguard international dollar liquidity. This locks in the status of the U.S. dollar as a reserve currency in the hands of central banks, while reducing the demand for U.S. Treasuries in the financial markets. And U.S. Treasuries are the most important dollar assets, central banks no longer need to buy and hold ordinary U.S. Treasuries, and that is equivalent to a decline in the demand for the dollar. The dollar exchange rate falls, the competitiveness of U.S. products rises, plus tariff protection kicks in, thus the United States of America re-industrialization is successfully reached, which is perfect![24]

 

The present US Finance Minister Scott Kenneth Homer Bessent has already discussed the US dilemma caused by the huge government expenditures:

 

 

To some extent, the original objective of the Trump administration may be actually a good one as depicted from the pathways:

 

Countries buy U.S. national bonds → debt released to residents based on US debt  →  residents buy domestic goods

 

U.S. tariffs → countries stimulate domestic demand  →  less demand for U.S. Treasuries  → volume of U.S. Treasuries declines, interest on Treasuries decreases, U.S. foreign financial dependence decreases; countries stimulate internal investment, residents buy domestic goods

 

There are actually three policy pillars[25] for the present Trump administration: 1) Reduction of government expenditures will reduce the federal government deficit from 7% of GDP to 3% by 2028; 2) Government deregulation on banking and business activities will inject more energy into small and medium-sized businesses; 3) The tariffs on foreign goods will penalize those businesses who still remain on the foreign land and get them to return their manufacturing business so as to revitalize the domestic economy and reduce the cost of living.

However, sometimes even people with a good will may have done bad things with the bad strategies, let alone the good will may not include sufficient considerations for the other countries.

 

VII. Policy Alternatives

The author hereby uses the approach of risk management analysis in project management. Below each option is listed and analyzed briefly.

1.      Accept

While a risk can be accepted, the acceptance may be made proactively or passively. The proactive acceptance involves planning and budgeting, resource preparation and allocation, and reserves for emergency use.

2.      Reduce

This has been used a lot. First, a test will be done to see if there will be considerable effects. If not, ways will be sought to remove the threat or the plan for the project will be changed. If yes, ways will be sought to reduce the effect both in the degree and in the scale.

Possibility or Degree

Currency devaluation and interest rate decrease can be considered ways to cushion the tariffs effects. However, when analyzing the case of the Renminbi (Chinese Yuan) devaluation, Adler et al. (2019) argue that while a country's currency depreciation can lead to expenditure switching, expenditure switching is unlikely to lead to a lasting improvement in the trade balance, and offsetting the impact of tariffs requires a sustained and significant depreciation of the currency, which is difficult to achieve through monetary policy alone. At the same time, data observations suggest that the depreciation of the RMB exchange rate in China has had little impact on the dollar price for Chinese exporters.

 Scale

With overall tariffs, both Canada and the US will be hurt hugely. “We know that the further we go down this road, the more pain both economies will feel. It’s mutual assured destruction,” the former foreign affairs minister Peter MacKay said[26]. Professor Trevor Tombe at University of Calgary said that Canada had limited ability to actually affect the U.S. economy[27].

When tariffs are discussed, there can be two kinds of tariffs, targeted ones and dollar for dollar ones. Canada has already fought one tariff "war" with Trump. During his first term, the US president slapped 10% tariffs on Canadian aluminium products and 25% tariffs on Canadian steel, citing national security concerns. Ottawa retaliated by imposing tariffs on select goods, which were chosen to send a political message to Trump and his allies. It put levies on Florida orange juice, and whiskey and bourbon from Tennessee and Kentucky - the latter being the home of then-Republican Senate Leader Mitch McConnell. Both countries ended up agreeing to lift the tariffs a year later. According to US government data, 17% of US exports go to Canada. More than 75% of Canada's exports go to the US. Canada stands to suffer a larger economic blow in any trade war with the US and this stark imbalance is why targeted tariffs are often the first and safest approach, said Peter Clark, a lawyer who previously worked on trade policy issues in Canada's federal finance department. Through targeting select goods, Canada can hit the US without widely punishing its own citizens, as tariffs can immediately raise prices for consumers at home. This approach is also why officials are pushing a "Buy Canadian" campaign as a way to lessen the impact of a potential retaliation[28].

Scott Moe, leader of the mineral-rich province of Saskatchewan, has said that broad levies on US goods would "rip this country apart". Mr Karaguesian said the promised US tariffs on Canadian goods could plunge the country into a recession. If Canada responded with dollar-for-dollar tariffs, it could lead to inflation, with stagflation the combined result[29].

To a certain extent, the UK and Australia are not as reliant on exports to the US as Canada. That is why Canada needs to wake up and pull itself from this awkward situation as soon as possible if not immediately. At the same time, Canada needs to delay the tariffs and get the rate of tariffs reduced.

Canada also has a last resort. North-eastern US states like Vermont, New York and Maine significantly rely on electricity sold to them by neighbouring Canadian provinces. As threatened by Ford, ON could pull the circuit breaker cut off electricity for the US.

3.      Transfer: Outsourcing or Insurance

This option applies more to businesses as it is hard to outsource or insure the whole economy.

4.      Avoid

Ways to remove the threat or change the plan would be avoidance.

1)    Cooperate

One of the best options is surely to cooperate with each other so as to remove the threat and achieve a win-win result. When two parties become foes, usually a fight is entailed, and the probability that no one gets hurt is quite low. Therefore, the best strategy is to subdue an army without any fight, according to the Art of War of Sun Tsu. However, if we can become friends, then as friends we will not hurt each other, but will benefit each other, so that the welfare of both get increased.

This does not mean that Canada should be the 51^st state in the US as that will be a nightmare for the Trump administration. First, if Canada is annexed to the US, as one of the largest state and as one with free medical care and the average house price lower than the US (with C$707,100 compared to C$745,015 (converted by multiplying US$521,500 by 1.4286, the exchange rate on 30 Mar 2025, and please also note that the home price at all other Canadian provinces except for ON and BC is about C$530,000)[30], many people from the other states would flock into Canada, causing instability and shortage of talents in some states of the US. Secondly, as Canadians tend to be more democratic (even for some Conservative Canadians) than the Americans, the Trump administration would see a blue state joining in with 13 electoral votes probably lost from Mr. Trump.

However, it might be a good idea for the US to join in the Commonwealth. Recently Mr. Trump responded to the idea on Truth Social, writing: "I Love King Charles. Sounds good to me!" While it is a voluntary association of countries which is predominantly focused on encouraging cooperation, trade and shared values, the Trump administration needs to stop making healthcare harder to access and getting thousands of people into poverty in the global south, and the other member countries need to agree[31].

2)    Find Substitutes

When we cannot cooperate, we can still avoid the fight by turning to the others for business. Some argue, given the economic costs of retaliation, that Canada should instead focus on diversifying its global trade relationships and increasing domestic production and coordination. "We're a natural resource superpower," Mr Karaguesia (an economics lecturer at McGill University in Montreal and a former finance counsellor at the Canadian embassy in Washington DC) said, adding that the country could use the tariffs as a push to harness that potential and sell its products elsewhere.[32]

There is a recent business case that can be borrowed to show how a political risk is handled by a business. In this case, the business wants to remove the risk by realizing the sale. It may not be successful at the end, but it serves as something we can bear in mind when we take actions. In a surprising move, Ka-Shing Li, once the richest man in Asia, has announced the sale of 43 global ports, including critical locations such as the Panama Canal ports of Cristobal and Balboa. This decision comes as his company, CK Hutchison (note that A Hutchison subsidiary has operated ports at both ends of the Panama Canal since 1997) plans to sell its overseas port operations to BlackRock for $22.8 billion, expected to yield around $19 billion in cash for Li. The Panama Canal is often referred to as a "golden waterway," and controlling these ports means significant influence over maritime trade routes. Many experts believe this move stems from geopolitical risks, especially in light of rising tensions and scrutiny from the U.S. government towards foreign control over American infrastructure. Following Donald Trump's return to the political arena, there have been concerns regarding potential U.S. military or economic interventions in the Panama Canal, in addition to potential audits and contract terminations from the Panama side[33]. Trump previously demanded the fees charged on US naval and merchant ships be lowered, or else Panama should return the canal to the US. A commentary published on Ta Kung Pao raised the question, “why were so many important ports transferred to ill-intentioned US forces so easily? What kind of political calculations are hidden in the so-called commercial behavior on the surface?”[34] After a series of articles went published attacking Li’s action, his shares plumped about 18% in 11 days.

While this may be an information-based commercial decision, this deal is becoming a battle in the trade war arena. Chinese companies could have bought Li’s ports, yet taking both country risks and business risks. Li’s companies recently have the pressure to report detailed sensitive facility information to NATO. Though Li’s port capacity accounts for 5.86% of the world, Li is very alert on the global investment environment. As a matter of fact, his shares of stock increased in value of $53.47 billion (calculated by multiplying the difference of the values between Mar 4 and Mar 7 and the exchange rate 7.78), which is almost triple the amount of the deal[35]. Also, the profit from those 43 ports account for just 1% of the total profit of Li’s port business. From 2005 to 2023, global trade in digitally delivered services expanded at a compound annual growth rate (CAGR) of 8.2%, outpacing the growth of goods trade exports by 4.6% and overall services exports by 6.2%. Over this period, the value of digitally delivered services increased from $1.0 trillion to $4.3 trillion. Digitally delivered services trade includes services exchanged via computer networks, such as the Internet, apps, emails, voice and video calls, and digital intermediation platforms. Advanced economies dominated the sector in 2023, accounting for more than 80% of the total trade in digitally delivered services[36]. Nevertheless, in February, the United States Trade Representative (USTR), which was tasked with investigating the issue, proposed a $1.5 million (€1.42 million) fee[37] for any Chinese-made ship docking at a US port. The fee is justified, USTR said, to counteract what it sees as unfair advantages gained by China in shipbuilding that "burden or restrict US commerce." Therefore, this could be a big game play between the US and China, with Ka-Shing Li sandwiched in the middle. However, even if the deal was approved and carried out, the Chinese ships could still get around those ports with their strong high-capacity modernized ships.

The author has compiled a welfare matrix to reflect the welfare reached using each of the four strategies: cooperate, one side attack while the other side avoids, one side avoids while the other side attacks, and fight with each other. One can easily see that cooperation is the best solution as both parties win, while fighting is the worst solution as both parties lose.

	Cooperate	Attack & Avoid	Avoid & Attack	Fight
Party A	1	Uncertain	0	-1
Party B	1	0	Uncertain	-1

 

VIII.       Adoptable Measures

1. Avoid the Fight

As mentioned above, the best strategy is to put down the weapons and cooperate with each other. While this can be difficult, some talented professional people can be utilized to negotiate in trade talks to win the best possible result. If not, every means should be tried to delay the full-scale tariff war. In the meantime, preparation needs to be made to clear up the obstacles for trade and investment, and constructive communication with other trading partners needs to be underway.

2. Solve the Internal Problems

1) Political Correctness and Online Censorship

Trudeau's Liberals were widely viewed as being primarily focused on things like inequality, wealth redistribution, social programs, climate change and reconciliation. Nevertheless, in his campaign launch in January 2025, Carney voiced the concern that the Trudeau government had let its "attention wander from the economy too often." A new focus on classic economic concerns might also align with the most immediate threat to the country: Donald Trump's trade policies[38].

The Chinese government was accused of interfering the Federal government election in 2021, and the MP Han Dong was said to be involved. However, after 4 years of questioning more than 40 people, no specific evidence was found[39].

As a matter of matter, the present Canadian government was almost the opposite in everything to the US one, advocating high government expenditures, a zero-emission environment, and promoting democracy in Asia, while Mr. Trump is trying to cut on government expenditures, get away with the Paris Accord and win favor from Russia and China.

Online interference was established with the 2023 passing of Bill C-11, the Online Streaming Act, which placed digital streamers under the ambit of the Canadian Radio-television and Telecommunications Commission (CRTC). The act gave the CRTC the government’s blessing to impose Canadian content requirements on streaming giants, as well as some form of diversity requirements — similar to the ones imposed upon the CBC not too long ago. It also permitted the CRTC to take a cut of their Canadian revenues. Despite the many objections they faced, the Liberals fast-tracked the bill through Parliament. Now, not only is the government preparing to tell streaming companies what to produce and how to spend their budgets, it’s also making these services more expensive[40]. However, silencing one’s opponents by crying hate just isn’t going to work as effectively as before anymore.

2) Safety and Social Problems

With the overflow of refugees and temporary residents, housing has become an issue, and so has safety and social security. Also, with legalized marijuana in production and sales and more lenient rules on fentanyl, there tends to be more drug abuses and thefts and robberies.

3) Business Monopoly and Oligopoly

In Canada, both monopolies (where a single company dominates an industry) and oligopolies (where a few companies control a market) are prevalent, particularly in sectors like banking, telecommunications, and airlines, limiting consumer choice and potentially impacting prices and innovation. Also, oligopolies such as supermarket chains, oil firms, steel mills, and railroads have been all popular in the past. The country’s grocery sector is ruled by the big three: Loblaw Companies Ltd., Metro Inc. and Empire Company Ltd. These companies also own subsidiaries. Loblaw is the parent company of No Frills, while Sobeys and FreshCo are under the Empire banner. The Competition Bureau, Canada’s competition watchdog, confirmed that grocery prices are spiking at the fastest rate in four decades. According to the Canadian Wireless Telecommunications Association, Rogers is the largest cellphone service provider in the country, followed by Bell and Telus. Much like the grocery chains, these companies own a bevy of sub-brands: Koodo and Public Mobile are Telus offshoots, Bell has Virgin Plus and Lucky, while Fido and Chatr are under the Rogers banner. This relationship created an uncomfortable result in July 2021 with the Rogers outage that affected millions of Canadians’ cellphone and internet service. However, Rogers still took over Shaw Communications Inc. in July 2023.

One of the Competition Act’s most controversial features is the “efficiency defence,” which pertains to merger laws. If the efficiencies (cost-savings) of a proposed merger outweigh (captures what can be quantified) and offset the anticompetitive effects, the merger is allowed even if it’s been found to be anti-competitive by the Competition Tribunal. “If you look at who loses and who wins it often tracks with who has the most economic power,” says Jennifer Quaid, associate professor and vice-dean research at University of Ottawa’s Faculty of Law. “Those who benefit tend to be those who are already well-off or in a position to protect their interests.” [41]

The consequences of consolidation are very direct and visceral, higher prices, a lack of choices, and less responsive to consumer feedback, which can really wear down on people. Also, start-ups and small businesses don’t find the environment very appealing. According to the author, the role and functions as well as the enforcement protocol of the Competition Act need to be strengthened. While natural monopolies and oligopolies can benefit the public with their scale of economy and contribution to employment, administrative monopolies and oligopolies should be monitored and restrained.

Also, the role of paralegals and notaries and pharmacists can be enlarged to help the public and benefit the economy.

4) Declining Manufacturing Industry

Newly released data reveals that manufacturing productivity contracted at an annualized rate of 1.5% in Q3 2024—the third consecutive quarterly decline and the ninth drop in the past ten quarters. According to the IBISWorld database, Coal Mining in Canada decreased by 13.3% and Steel Rolling & Drawing in Canada decreased by 11.2% in 2024[42]. The decline of Canada's manufacturing base may provide insight into the country's worsening productivity trends.

The manufacturing industry needs to be remodelled to deal with the new challenges of global trade war and sustainable development. Career training and infrastructure update need to be emphasized in auto plants in Oshawa of Ontario, and a stable policy environment and a diversified sustainable economic development need to be emphasized in Edmonton of Alberta and southwestern Saskatchewan.

5) Swollen Government, Bureaucracy and Low Efficiency

Total health expenditures in Canada are projected to reach $372 billion, or $9,054 per Canadian. Total health expenditures increased by 1.7% in 2022 and 4.5% in 2023, and are expected to rise 5.7% in 2024. At least 15,000 Canadians died while waiting for surgery or a diagnostic scan over the course of a year since 2018, according to government data collected by public policy think tank SecondStreet.org. The true figure for the fiscal year 2023-24 is likely nearly double owing to a “huge hole” in the data, said SecondStreet president Colin Craig[43].

The average pension for a normal person is $1000-2000 per month, but the average new federal pension per month last year was more than $2900. Moreover, a federal employee retiring with an average pensions at age 55 will collect close to $1 million in lifetime pensions[44].

According to Professor Jiawei Zhang's new blog[45], in 2015, the federal government employed 263,000 people; and at the end of 2024, it employed over 350,000 people, at a growth rate of more than 30%.The size of the federal spending budget before Trudeau came to power was $290 billion in 2015; it reached $600 billion during the epidemic; and after the epidemic, it is still close to $500 billion, at an increase of 70%. However, the gap between the standard of living of the average Canadian family compared to the U.S. declined dramatically overall from 2015-2024, as shown from the following table.

6) Unbalanced Treatment

In a democratic country, fairness and equity is what should be promoted. However, there are many areas polluted with mistreatment and injustice, characterized by some of the following:

• Differential treatment of aboriginal people with preferential ratio for recruitment in certain big companies, free education and exemption of taxes (note there may be some grandfathered agreements in place, but it should not be everywhere and forever as unfair treatment tend to breed hatred and laziness)
• Differential treatment of refugees with huge payouts for accommodation and living expenses exacerbating the government deficit woes and housing crisis while those new immigrants that come through rigid screening have to make their own ends meet
• Differential treatment of some big provinces in the federal government transfer payments bringing forth issues of provincial independence (please note that in Canada the Clarity Act, which has been approved by the Supreme Court of Canada, governs the process a province should follow to achieve separation and that the first step is a province-wide referendum with a clear question)

7) Intuition-Based Decision-Making

Decisions should be made based on rational analysis of complete correct information. Many times professional advice needs to be sought, and lessons of the past and other countries can be learned. For example, while the intent to stabilize the general price is good, the gathering of all big conglomerates to curtail the retail prices is like adding fuel to the fire.

As far as the Federal election is concerned, the writer reminds the readers to consider the following points:

• The platforms of the parties and the differences among them, which are more practical, reasonable and systematic if they are similar
• The promises as well as their past actions as actions speak louder than words
•  The people around the leader of each party, what kind and if they are empathetic to the general public
• What we strive for compared to what we strived for before and suffered from it
• The fairness and rules of the play (for example, to what extent the security clearance can deter foreign interference when all parties have to abide by the present donation rules, and how most of the media will depict the picture when reporters can travel together with the candidates)

Carney said that for the generations that followed the baby boomers, things haven’t been as good. He declared that it is time to make big changes and build an economy that works for everyone. The point is that, will Carney and the Liberals deliver? If so, to what extent?[46]

3. Stimulate Domestic Demand

Eliminating interprovincial trade barriers could add 4% to real gross domestic product per capita in Canada, equivalent to $2,300 per person per year, according to a 2019 estimate from the International Monetary Fund. Even better, there is a simple solution to this seemingly intractable problem: a mutual recognition agreement. By requiring all provinces to accept the certifications of another, we would immediately eliminate the need for people or products to meet the varying requirements of different jurisdictions. Australia, an economy with many similarities to our own, implemented an internal mutual recognition agreement in 1992 and has fared well since then[47].

Back in the early 1980’s interprovincial trade and international trade were roughly equal as a proportion of GDP. However, while exports to other countries has risen as a share of the economy, trade between provinces has fallen by a similar amount, compared with 1982[48].

4. Trade Diversification

1) Countries or Regions

In the case of forestry and packaging products, compared with 2011, exports to other countries have also fallen, while for industrial machinery the growth in exports to such nations was tiny compared to the surge seen in US trade. Examining data on the proportion of companies who export (rather than the value of the goods themselves) shows that between 2006 and 2020 roughly 85% of exporters sent goods to the US and approximately the same proportion had links to at least one other country. Unfortunately, the proportion trading with at least one other country has fallen below 70% recently. The number of companies exporting to both Asia and Europe is at the lowest in more than 20 years[49].

While Australia does not retaliate against the US, it actively broadens its trade with other countries. On 25 Mar 2025 Australia's biggest gas export deal was announced between Britain's BG Group and China National Offshore Oil Corporation for the sale of 3.6 million tons of liquid natural gas each year for the next 20 years (worthy of $40 billion  based on a crude oil price of $70 per barrel)[50].

In response to ongoing tariff discussions, Canadian businesses are adjusting strategies to mitigate risks and maintain stability. More than 2 in 5 (44%) are exploring alternative suppliers to diversify supply chains and reduce dependency, while almost a quarter have delayed or canceled expansion plans, reflecting a more cautious approach to capital investment. Labor adjustments are also notable, with 19% reducing their workforce to manage rising costs. Additionally, 18% are pursuing market diversification or seeking external advice to strengthen their competitive position (19%)[51].

2) Industries

Canada’s large trade dependency with the US partly reflects a high level of concentration in two key areas – energy and autos. For energy exports this dependency will be maintained unless new oil pipelines flowing east are approved and laid. For autos, the high dependency reflects the intertwined nature of the North American auto industry more generally, as cars and parts cross borders at different stages of construction[52].

Canada needs to focus on sectors that are less reliant on traditional resource exports, such as renewable energy and IT and look at ways to support Canadian innovation and entrepreneurship to create new industries and export opportunities. Also, learning from emerging economies, Canada should leverage its economic strengths, such as its skilled workforce and access to natural resources, to create a more resilient and self-sustaining economy. Last but not least, measures should be taken to address supply chain issues and reduce reliance on a single or limited number of suppliers.

In 1972, Mitchell Sharp, then Canada's Minister of Foreign Affairs, wrote a paper entitled “Canada-U.S. Relations: Options for the Future”. At the time, international politics was in transition and the United States was recalibrating its perception of its national interests. Sharp suggested reconsidering the Canada-U.S. relationship. He noted that while Canadians recognized the benefits of a relationship with the United States, they were becoming increasingly cautious about the direction of the relationship and supported measures to “ensure greater Canadian independence”. He argued that the central question for Canada was whether Canada's interdependence with the United States would “put uncontrollable pressure on the notion of an independent Canadian identity, or even on the very elements of Canadian independence”. He proposed three options, the status quo, a free trade agreement, and a third way (a long-term strategy to strengthen the Canadian economy and reduce vulnerability). A free trade agreement would be “an almost irreversible choice for Canada” because it would tie Canada to the U.S., thus raising the cost of disengagement. At the same time, the U.S. can redefine the relationship at any time and for any reason, as was the case in 2001 when the U.S. prioritized security over prosperity in the wake of the 9/11 attacks. The same is true now[53]. Now, given that Trump is undermining international trade order and attempting to bully its neighbors in unprecedented ways, the risks and costs of integration uncertainty are now greater. The different values and bullying exhibited by the United States make maintaining the status quo hardly possible either.

 

IX.             Conclusion

With all the theories and cases discussed above, Canada should avoid direct conflict with the Trump administration, delay the tariffs as long and as much as possible, redirect its oil and gas to the European market, its agricultural and lumber products to the Asian market and buy from both Europe and Asia what it used to buy from the US. In this way, the harm in tariffs will be reduced to the greatest extent and the Canadian economy will also be restructured successfully.

 

报复与否：这是个不应考虑的问题

- 以独立视角看待愈演愈烈的加美贸易战

 

摘要：目前几件事情同时发生了。特朗普政府开始断断续续地对从加拿大进口的商品征收 25% 的关税；尽管当前环境复杂多变，加拿大央行还是决定再次降息；自由党选出了新的领导人马克▪卡尼（Mark Carney），他有着出色的教育和职业背景。加拿大联邦大选定于 2025 年 4 月底举行。本届特朗普政府实际上有三个政策支柱： 1）削减政府开支，到2028年，联邦政府赤字占GDP的比例将从7%降至3%；2）政府放松对银行和商业活动的管制，为中小企业注入更多活力；3）对外国商品征收关税，惩罚那些仍滞留在国外的企业，让他们回归制造业，从而振兴国内经济，降低生活成本。面对美国总统唐纳德-特朗普征收的关税，迄今为止，一些国家的反应是 “不予理睬”，没有采取报复性关税措施。消除省际贸易壁垒、解开阻碍加拿大与其他国家达成某些贸易协定的繁文缛节，或许对加拿大经济更有帮助。即使采取报复措施，联邦官员也有经验对加拿大生产商可以替代的进口酒类征收关税。例如，对加拿大真正依赖的美国进口产品（如药品）征收关税就不是一个好主意。加拿大需要从对美国的依赖中清醒过来，以免被五花大绑，因为加拿大在中国、印度、沙特阿拉伯等一些重要国家的朋友越来越少。加拿大目前是一个资源型经济体，其优势在于石油和天然气。因此，加拿大应该为石油和天然气产业提供补贴，使其能够腾飞到更高的高度，而不是向资源产业征税和奖励绿色产业。加拿大还应向美国学习，改变高政府支出、高赤字和高调维护环境保护的做法。货币贬值和降低利率可以考虑作为缓冲关税影响的方法。然而，中国的经验告诉我们，货币贬值对贸易平衡的改善并不持久，对中国出口企业的美元价格影响也不大。根据美国政府的数据，美国有 17% 的出口到加拿大。而加拿大 75% 以上的出口都流向了美国。在与美国的任何贸易战中，加拿大都将遭受更大的经济打击。现在是加拿大经济未来和国家团结的关键时刻。综合上述理论和案例，加拿大应作出米歇尔▪夏普70年代说的第三种选择，避免与特朗普政府直接冲突，尽量在时间上和范围上拖延关税，解决内部问题，将石油和天然气转向欧洲市场，将农产品和木材产品转向亚洲市场，从欧洲和亚洲购买过去从美国购买的产品。这样，关税带来的危害将得到最大程度的降低，加拿大的经济结构也将得到成功的调整。

 

关键字：加美贸易、关税、报复、贬值、多元化

 

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[1] Mark Gollum. “Some countries aren't retaliating against Trump's tariffs. Should Canada 'turn the other cheek'?” CBC News, 14 Mar 2025, https://www.cbc.ca/news/canada/tariffs-retaliatory-1.7482385.

[2] Zoe Mason. “Sleeping with an Elephant”, the Fullcrum, 6 Oct 2019, https://thefulcrum.ca/features/sleeping-with-an-elephant/.

[3] The Poem of Seven Steps, https://en.wikipedia.org/wiki/The_Poem_of_Seven_Steps.

[4] AV Mind. “It's Gonna Fail - Jordan Peterson on Mark Carney As Prime Minister Of Canada”, 18 Mar 2025, https://www.youtube.com/watch?v=UNZ7rYiWwPg.

[5] Rick Bell. “Bell: Smith firm — if demands tossed, Alberta could hold a referendum”, Calgary Herald, 21 Mar 2025,

  https://calgaryherald.com/opinion/columnists/danielle-smith-alberta-referendum.

[6] 2025 United States trade war with Canada and Mexico. Please take time to read the introduction at https://en.wikipedia.org/wiki/2025_United_States_trade_war_with_Canada_and_Mexico.

[7] Lynch, David J. (February 1, 2025). "Trump signs order imposing tariffs on Canada, Mexico and China". The Washington Post. Archived from the original on February 2, 2025. Retrieved February 2, 2025.

[8] John Paul, Tasker (February 2, 2025). "Trudeau hits back at the U.S. with big tariffs after Trump launches a trade war". CBC News. Retrieved February 2, 2025.

[9] John Vidas. The Economic Impact of Tariffs: Lessons from Smoot-Hawley and Modern Trade Policy. RBC Wealth Management, 13 Feb 2025. Please also check the website by clicking the link at https://ca.rbcwealthmanagement.com/john.vidas/blog/4460913-The-Economic-Impact-of-Tariffs-Lessons-from-Smoot-Hawley-and-Modern-Trade-Policy.

[10] Simon Little and Kylie Stanton. “Canadian leisure travel to U.S. down 40% in February, Flight Centre says”. Global News, 6 March 2025.

[11] Suzanne Rowan Kelleher. "Canadian Road Trippers Boycotting U.S. Could Mean A $4 Billion Economic Loss". Forbes, 20 March 2025.

[12] Yousif, Nadine (February 2, 2025). "Canadian fans boo US anthem as tariffs spur 'buy local' pledge". BBC News. Retrieved 2 February 2025.

[13] “The True Cost of Trump Tariffs: Provincial Impacts”, the Conference Board of Canada Economics Team, 13 March 2025. Check https://www.conferenceboard.ca/insights/the-true-cost-of-trump-tariffs-provincial-impacts/?campaign=gag_finalurlsuffix_account_level&gad_source=1&gclid=EAIaIQobChMIkY6jkdCljAMVX0T_AR2AGjFLEAAYASAAEgJxvPD_BwE.

[14] Laberge, Thomas (February 2, 2025). "Trump Tariffs: Legault wants to penalize United States businesses". CTV News. Retrieved 2 February 2025.

[15] Petition to strip Musk of Canadian citizenship gathers 280,000 signatures. Please check the website https://www.aljazeera.com/news/2025/2/26/petition-to-strip-musk-of-canadian-citizenship-gathers-280000-signatures.

[16] “Canadians who visit US for more than 30 days will be fingerprinted". Guardian, 13 March 2025.

[17]  Helmore, Edward (February 2, 2025). "Wall Street Journal editorial calls Trump tariffs 'dumbest trade war in history'". The Guardian. ISSN 0261-3077. Retrieved February 3, 2025.

[18] "Donald Trump's economic delusions are already hurting America". The Economist. March 6, 2025. ISSN 0013-0613. Archived from the original on March 6, 2025. Retrieved March 6, 2025.

[19] Becker, Andreas (March 3, 2025). "Trump tariffs: Can US be punished for breaking trade laws?". Deutsche Welle. Archived from the original on March 4, 2025. Retrieved March 6, 2025.

[20] Xiaoyan Wang, Xin Li & Jiandong Ju. The impact of tariff increases in China and the United States: a literature review (Chinese). Journal of Shanghai University of International Business and Economics, May 2021. Please click https://eng.pbcsf.tsinghua.edu.cn/__local/A/44/B6/99214DD85CB44BD391624315C5F_34B77580_1AA87F.pdf?e=.pdf.

[21] The Smoot-Hawley Tariff Act (Chinese). Please take time to read the full review by clicking the link https://zh.wikipedia.org/wiki/%E6%96%AF%E5%A7%86%E7%89%B9-%E9%9C%8D%E5%88%A9%E5%85%B3%E7%A8%8E%E6%B3%95%E6%A1%88.

[22] President Trump is Remaking America into a Manufacturing Superpower, https://x.com/WhiteHouse/status/1900247242591662565.

[23] “Saudi Arabia plans to invest $600 billion in U.S. over next 4 years, crown prince says in call with Trump”. CBS News, 23 Jan 2025. Please check the website https://www.cbsnews.com/news/saudi-arabia-600-billion-us-next-4-years-mohammed-bin-salman-trump/.

[24] Zhong Jin. “Three capital forces behind Trump gradually emerge as BlackRock buys Ka-shing Li's port business ..” (Chinese). Observer, 10 Mar 2025. Please check the comprehensive article by clicking the link below https://www.deepl.com/en/translator#zh/en-us/贝莱德收购李嘉诚港口业务，特朗普背后的三股资本势力逐步浮现…….

[25] “Treasury Secretary Scott Bessent Remarks at the Economic Club of New York”, 6 Mar 2025. Please check the site https://home.treasury.gov/news/press-releases/sb0045.

[26] Larysa Harapyn. “Tariff war 'mutual assured destruction': Peter MacKay”, Financial Post, 19 Mar 2025, https://ca.finance.yahoo.com/news/tariff-war-mutual-assured-destruction-204751626.html.

[27] Please check Note 1 again.

[28] Nadine Yousif. “Booze, oil and orange juice: How Canada could fight Trump tariffs”, BBC News, 1 Feb 2025, https://www.bbc.com/news/articles/c93qnk92174o.

[29] Please check the above note.

[30] “Average sales price of new homes sold in the United States from 1965 to 2024”, Statista, 30 Jan 2025, https://www.statista.com/statistics/240991/average-sales-prices-of-new-homes-sold-in-the-us/. Jessica Steer. “The Average Home Prices in Canada 2025”, Spring Financial, 17, Jan 2025. Please also check the article at https://www.springfinancial.ca/blog/lifestyle/average-home-prices-in-canada.

[31] Jack Royston. “What US Joining King Charles' Commonwealth Could Look Like”, Newsweek, 26 Mar 2025, https://www.msn.com/en-us/politics/government/what-us-joining-king-charles-commonwealth-could-look-like/ar-AA1BWoJ2?ocid=BingNewsSerp.

[32] Please check Note 11.

[33] Li Ka-Shing Sells 43 Ports While Keeping Domestic Assets What Does This Mean for China's Future, 12 Mar 2025, https://www.echemi.com/cms/2289727.html.

[34] Angus Whitney. “China Ramps Up Criticism of Li Ka-shing’s BlackRock Ports Deal”. Bloomberg, 15, Mar 2025. Please refer to https://finance.yahoo.com/news/china-ramps-criticism-li-ka-043902982.html.

[35] “$22.8 billion takeover of Ka Shing Li's port! BalckRock’s background?” (Chinese). Sina Finance, 10 Mar 2025. Please check https://finance.sina.com.cn/stock/s/2025-03-10/doc-inepeiip3585475.shtml.

[36] Ehsan Soltani. “Global Digitally Delivered Services Trade Surges to $4.3 Trillion in 2023.” Voronoi by Visual Capitalist, 27 Jan 2025, https://www.voronoiapp.com/trade/-Global-Digitally-Delivered-Services-Trade-Surges-to-43-Trillion-in-2023-3825.

[37] Nik Martin. “US strikes back at China's maritime trade with port fee.” DW, 10 Mar 2025, https://www.dw.com/en/donald-trump-us-china-trade-protectionism/a-71814384.

[38] Aaron Wherry. “Trudeau pulled the Liberals left. Where do they go from here?” CBC News, 25 Jan 2025, https://www.cbc.ca/news/politics/liberals-capital-gains-freeland-carney-analysis-1.7441195.

[39] Peter Zimonjic. “PMO officials refute allegations against Han Dong at foreign interference inquiry”, CBC News, 9 Apr 2024, https://www.cbc.ca/news/politics/foreign-interference-inquiry-pmo-1.7167956.

[40] “The age of Trudeau's censorship schemes is over”, National Post View, 11 Jan 2025, https://nationalpost.com/opinion/np-view-the-age-of-online-harms-legislation-is-over.

[41] “The Canadian business playing field isn’t as fair as you think”, CPA Canada, 21 Dec 2022, https://www.cpacanada.ca/news/pivot-magazine/canadian-business-competition.

[42] Stephane Marion and Ethan Currie. “The atrophy of the Canadian manufacturing sector has gone too far”, National Bank of Canada Financial Markets Special Report, 23 Dec 2024. Please click the following link https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/etude-speciale/special-report_241223.pdf. 

    “What Are The Fastest-Declining Jobs/Industries in Canada? Here’s The List”, IQ Partners, 1 Oct 2024, https://www.iqpartners.com/blog/what-are-the-fastest-declining-jobs-industries-in-canada-heres-the-list/.

[43] Canadian Institute for Health Information. National health expenditure trends, 2024 — Snapshot. Accessed March 25, 2025; Sharon Kirkey. "More than 74,000 Canadians have died on health-care wait lists since 2018: report", National Post, 15 Jan 2025, https://nationalpost.com/news/canada/canadians-health-care-wait-list-deaths.

[44] “BRIEF FROM FAIR PENSIONS FOR ALL”. Please take time to read the article by clicking https://www.ourcommons.ca/Content/Committee/411/FINA/WebDoc/WD5138047/411_FINA_PBC2011_Briefs/Fair%20Pensions%20For%20All%20E.html#:~:text=The%20average%20new%20federal%20pension,%241%20million%20in%20lifetime%20pensions.

[45] Jiawei Zhang. “Home in China” (in Chinese), 30 Mar 2025. Please take your time to read the article at https://mp.weixin.qq.com/s/jI3StVhj31VbnHBN9QWNGQ.

[46] Brian Lilley. “Both leaders promise change, but only Poilievre can deliver”, Toronto Sun, 23 Mar 2025, https://torontosun.com/opinion/columnists/lilley-both-leaders-promise-change-but-only-poilievre-can-deliver.

[47] Michael Burt. “Beyond Borders: A Simple Solution to Our Country’s Internal Trade Barriers”, Financial Post, 21 Feb 2025, https://www.conferenceboard.ca/insights/a-simple-solution-to-our-countrys-internal-trade-barriers/?campaign=gag_finalurlsuffix_account_level&gad_source=1&gclid=EAIaIQobChMI8Yi45a2ojAMVeifUAR0tOBVXEAAYASAAEgKQ7_D_BwE.

[48] Andrew Grantham. “Seeking diversification: Can Canada reduce its dependency on the US?” CIBC Economics, 25 Feb 2025, https://thoughtleadership.cibc.com/article/seeking-diversification-can-canada-reduce-its-dependency-on-the-us/.

[49] Andrew Grantham. “Seeking diversification: Can Canada reduce its dependency on the US?” CIBC Economics, 25 Feb 2025, https://thoughtleadership.cibc.com/article/seeking-diversification-can-canada-reduce-its-dependency-on-the-us/.

[50] "China signs massive Australian gas deal", United Press International, Inc., 25 Mar 2025. Please check the website https://www.upi.com/Energy-News/2010/03/25/China-signs-massive-Australian-gas-deal/95401269545716/.

[51] CFIB. “Navigating the Looming U.S.-Canada Tariffs: The Impact on Canadian SMEs and Their Next Steps”,

 17 Feb 2025. Please check https://www.cfib-fcei.ca/en/research-economic-analysis/navigating-the-looming-u.s.-  tariffs-the-impact-on-canadian-smes-and-their-next-steps.

[52] Andrew Grantham. “Seeking diversification: Can Canada reduce its dependency on the US?” CIBC Economics, 25 Feb 2025, https://thoughtleadership.cibc.com/article/seeking-diversification-can-canada-reduce-its-dependency-on-the-us/.

[53] Blayne Haggart. “Trump’s trade war is forcing Canada to revive a decades-old plan to reduce U.S. dependence”, the Conversation, 4 Feb 2025, https://theconversation.com/trumps-trade-war-is-forcing-canada-to-revive-a-decades-old-plan-to-reduce-u-s-dependence-248433.-the-us/.