U.S. Economy Could Feel the Sting From Trade War With Canada
New York Times · LC · trust 47/100
A tit-for-tat trade fight between the two allies could create new headaches for consumers and businesses already stung by high prices.
Listen · 6:24 min Share full article A renewed trade war between the U.S. and Canada could have economic ramifications on both sides of the border. Credit... Carlos Osorio/Reuters By Tony Romm
But that period of relative calm came to an end on Saturday, as new 50 percent tariffs from Washington took effect, drawing a pointed threat from Canada to respond in kind. The resulting clash left the two North American neighbors barreling toward a dangerous tit-for-tat escalation, one that may yet inflict real harm on the U.S. economy.
For Mr. Trump, the return to trade brinkmanship reaffirmed a time-old truth: His tariffs are taxes on imports, meaning some of the cost of his latest duties may ultimately fall hardest on U.S. importers stung by years of persistently high prices.
Although Mr. Trump’s tariffs only cover a small subset of Canadian goods, the consequences could quickly spiral. If Canada retaliates, and Mr. Trump does the same, the result could be a series of new shocks for the U.S. economy at a time when it is already weathering plenty.
“The bigger deal is uncertainty,” said Scott Lincicome, the vice president of general economics at the Cato Institute.
Mr. Lincicome said that volatility had pervaded Mr. Trump’s entire second term, as his ever-shifting tariffs — raised and lowered sometimes by the stroke of a pen — roil Wall Street, anger the courts, infuriate U.S. allies and help to drive up the price of consumer goods domestically.
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