New tariffs from the United States could spark a war of taxation, said John Reis, senior associate dean of the economics program at UBC. What is lost in our exports would likely be matched by tariffs on American imports into the country, in an effort to make up for lost revenue. A clash like this could push a new NAFTA signing further away from fruition, said Ries, and if a 25% percent tariff was imposed, it would definitely reduce the amount of business Canada could sustain in the auto sector. General motors, Ford, Honda, Toyota and Chrysler all base their Canadian auto fabrication out of Ontario, and in turn the impact would be felt more in that province than in B.C.
Ries says Trumps announcement could be an attempt to gain an upper hand in negotiations. Canada isn’t completely helpless in the discussions though, as Trump and his party will seek positive NAFTA news before the November six midterm elections, and thus far Prime Minister Trudeau has continued to stand his ground.