Now that trade talks have collapsed between Canada and the United States, it’s clear that something must be done to protect Canadians.
Prime Minister Mark Carney and Premier Doug Ford have called for “dollar-for-dollar” tariffs, which the federal government plans to impose on Sept. 8.
A tit-for-tat response seems to be supported by a lot of Canadians. But it’s not the right approach. Ford rightly went on American television this past weekend and said that President Donald Trump, through his tariffs, is imposing new taxes on the American people. The last thing Canadians need is more taxes on us.
Regardless of where you stand on tariffs, one thing is for certain: Parliament must be recalled. It’s time for Carney to explain to Canadians his perspective as to why negotiations fell apart and how he plans to lead the country through the economic crisis that is sure to follow.
Canadians deserve to know what the plan is.
Carney should recall Parliament and present a plan to Canadians that includes the following.
First, Carney should demand that premiers actually take down their internal trade barriers. Carney made a big deal last year of dismantling federal barriers to internal trade, but the provinces largely have not followed suit. This means blocking $210 billion of economic activity and is costing Canada seven per cent GDP growth. We can’t afford to leave that on the table any longer.
Second, Carney should cut taxes. Business, personal, and carbon. Trump cut U.S. corporate taxes back in 2017 and Canada never responded, making the country less competitive. There was a bipartisan consensus in the early 2000s that corporate tax cuts were needed to shore up Canada’s economy and its time for that bipartisan consensus to return. Canadians are also taxed far too much personally. It’s been 20-plus years since the feds implemented comprehensive tax relief and it’s high time for another dose. And the industrial carbon tax must go. It is making fertilizer and shipping more expensive, which is in turn fueling inflation and, in particular, food inflation.
Third, Carney should implement very targeted relief for certain hard-hit sectors. But this moment cannot lead to a top-heavy, government-run economy where everything is subsidized.
Fourth, Carney should avoid announcing further tariffs on the United States. Yes, tariffs can be a tempting response, particularly because Trump is huge fan of them. But ratcheting up the trade war, while politically popular, isn’t the answer. Why should Canadians pay more in taxes just because Trump has decided that Americans should pay more?
Finally, diversify trade. It won’t be easy to lower Canada’s reliance on the U.S. market, where Canada currently sends roughly 75 per cent of its present exports. But we do have a lot of things, particularly natural resources, that the world wants. So, let’s build pipelines and ports at paces never seen before. Let’s secure new trade deals with old friends and emerging markets.
This is not a moment to give up on our relationship with the United States, however. No matter how much more competitive Canada gets and how many trade deals Canada secures, there’s no eliminating such heavy dependency on one market overnight. The Trump administration will be on office for two-and-a-half more years, and then Carney or his successor will have someone else to deal with. Canada cannot, and shouldn’t not, end a trading relationship that has been so successful for so long on the basis of the wrongheaded policies of a single administration.
This moment calls for strong, steady, and decisive leadership. It will certainly show if Carney is up to the task. But instead of getting even, Canada’s leaders must focus on getting the country’s economy out of neutral.
Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center. He previously served as the Ontario Director at the Canadian Taxpayers Federation and a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
