Canada urged to prepare targeted responses to US tariffs while protecting its economic stability
Bennett Jones LLP, a Canadian law firm where former central banker David Dodge now serves as senior advisor, highlighted the need for Canada to safeguard its relationship with the US while preparing for “smart, targeted” retaliation if the Trump administration imposes broad tariffs.
According to Financial Post, the firm warned that such tariffs could damage Canada’s economy, affecting business and consumer confidence.
In its economic outlook for the coming year, Bennett Jones projected that Trump’s agenda—including 25 percent tariffs, tax cuts, and deregulation—could reduce Canada’s real economic growth by 0.6 percentage points in 2025 and another 0.5 points in 2026.
The firm also predicted that the Canadian dollar could weaken to 70 cents USD by the end of next year.
During a presentation on Wednesday, Dodge stated, “We emphasize it’s essential that businesses and governments focus on the opportunities for generating growth and not succumb to inaction due to uncertainty.”
Prime Minister Justin Trudeau echoed the need for action, reiterating his government’s readiness to respond to tariffs.
He pointed to Canada’s retaliatory measures against US tariffs on steel and aluminum in 2018 as an example of effective action. Provincial premiers met with Trudeau on Wednesday to compile a list of potential countermeasures.
The Bennett Jones report advised that any retaliatory measures “should be targeted strategically to inflict maximum political pain in the United States (in some cases localized) with the least collateral damage to Canada.”
The report suggested that Canada could mitigate the impact of tariffs on exporters and workers through additional trade assistance and unemployment benefits.
The report emphasized the importance of preparation, recommending that all levels of government begin developing these measures now to ensure swift implementation.
Dodge co-authored the outlook with former Bank of Canada deputy governor Paul Beaudry and other members of the firm’s public policy group.
The report concluded with a call for businesses and governments to focus on opportunities for growth while managing the challenges posed by US trade policies.
