蓝莓视频

After emerging from the pandemic on a relatively strong footing, the Canadian economy is now dealing with considerable trade and investment uncertainty because of U.S. policies, including tariffs.

鈥淐oming out of the pandemic, our economy was already facing a cost-of-living crisis, labour market struggling to adapt to demographic and immigration changes, business under-investment and slow-growing productivity, in addition to high inflation,鈥� says Dr. Horatiu Rus, a professor of Economics who specializes in international trade, political economy and the environment. 鈥淪tarting early this year, and due to policy changes in our largest economic partner, Canada鈥檚 challenging economic outlook has become substantially more challenging.鈥�

Faced with this economic instability, Rus says individuals would be well-advised to take a precautionary stance when planning all spending, investments and savings, and should consider in the short to medium run potentially significant swings in prices, interest rates, the exchange rate and employment opportunities economy wide.

There are indications that all sides will renegotiate the Canada-United States-Mexico Agreement (CUSMA), the successor of North American Free Trade Agreement (NAFTA), which was already set to be reviewed in 2026. 鈥淟imiting the amount of tariffs faced by Canadian exporters to the U.S. is the focus of these negotiations, but more importantly, so is reducing the massive levels of uncertainty dragging down investment and thus economic growth.鈥�

According to Rus, American protectionism is making it even more imperative for Canada to diversify its trade relations to reduce its reliance on the U.S. 鈥淥n the policy side, the government is taking steps to find a negotiated solution, while, simultaneously promising to cushion the blow for exporters experiencing sharp declines in their main export market due to tariffs and working to diversify Canada鈥檚 international trade flows.鈥�

鈥淎s a trade economist, I do not support a policy of broad tariffs,鈥� Rus says. 鈥淭he academic literature is clear on the effects of protectionism 鈥� tariffs increase prices for consumers, make intermediate goods more expensive for businesses, diminish the efficiency gains from specialization and production at scale, decrease product variety and ultimately reduce the economic potential of the economy over the long run.鈥�

Canada and the U.S. have one of the largest economic partnerships in the world, and this latest economic squabble may have additional implications. Rus says the significant U.S. policy shift is building further divides between the two countries, including in the environmental realm. 鈥淏ased on my research that investigates the interaction between trade and pollution, and trade and renewable resource exploitation, I believe there are many sustainability-related policy areas in Canada 鈥� many of them in fact under provincial jurisdiction 鈥� which will have to adapt to the new policy regime south of the border.鈥�

The economic relationship between Canada and the U.S. has fluctuated throughout its history. More recently, the border thinned following NAFTA in the 1990s then thickened following September 11, 2001. 鈥淟ike a marriage, the relationship between Canada and US will continue to weather its ups and downs, but the North American economy is highly integrated and geography dictates close trade ties going forward: it's hard to fight gravity.鈥�