Trudeau calls Trump decision "very very dumb" as retaliatory tariffs target US exports as TSX, S&P fall rapidly
Prime Minister Justin Trudeau has outlined Canada’s response to US tariffs on all Canadian exports. In a short speech delivered on Tuesday, Trudeau explained that $30 billion worth of American goods have been slapped with a tariff. A further $125 billion will be levied in three weeks if the United States does not lift their tariffs on Canadian goods.
“It’s not in my habit to agree with the Wall Street Journal, but Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do,” Trudeau said.
According to a report by the Wall Street Journal, Ontario has said it will impose a 25 per cent tariff on energy exports to three US states, including New York. Premier Doug Ford has reportedly instructed Ontario energy producers to shut down power exports if Trump imposes further tariffs on April 2nd.
Economists forecast recession
Should these tariffs last for a prolonged period, economists have predicted that Canada will be unable to avoid a recession. Economists surveyed by Bloomberg agreed that these tariffs may shave two to four per cent from Canadian GDP growth.
“A couple of quarterly contractions are likely for Canada, i.e., a moderate recession, before growth gradually resumes,” Sal Guatieri and Shelly Kaushik, economists at the Bank of Montreal, wrote in a report to investors. “Counter-tariffs and a weaker currency could see inflation spike more in Canada.”
There is a risk that these tariffs push Canadia towards stagflation, with both a negative impact to GDP as well as a potentially inflationary impact. Bank of Canada Governor Tiff Macklem has previously signalled that the BoC’s focus would be on the growth impacts of tariffs, implying that more interest rate cuts may come.
Markets fall on both sides of the border
US and Canadian stock markets both continued their sharp falls, which had begun on Monday with Trump’s confirmation that tariffs would be imposed on Tuesday. The S&P 500 was down around 1.7 per cent approaching noon on Tuesday. The Nasdaq Composite was down over 1.4 per cent and the DOW Jones Industrial Average was down nearly 1.8 per cent.
The TSX 60 was down over 2.6 per cent in the same time period.
