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Potential New Tariffs for Our Northern Neighbors

  • Writer: Claire Carpenter
    Claire Carpenter
  • 2 days ago
  • 2 min read
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On Saturday, October 25th, President Donald Trump announced on TruthSocial that he will impose an additional 10% tariff on one of the United States’ closest geographical neighbors and global allies: Canada. While this proposal has come without many details, it could widely impact many areas of the American economy. 


The economies of the United States and Canada have always been closely intertwined; trading agreements like the USMCA, NAFTA, and the FTA have sought to maintain beneficial trading circumstances between the major North American powers since the late 1900s. These economic treaties have encouraged trade, forging a strong economic bond between the two countries. Canada sent nearly three-fourths of its exports to the United States in 2024, with the majority of these goods falling under the categories of energy, vehicles, or agriculture.  


President Trump’s announcement didn’t specify which sector he aimed to target with this 10% increase. Currently, there is a 10% tariff, particularly on Canadian energy; and more broadly, 25% tariffs on a variety of goods from Canada or Mexico that enter the United States. These tariffs have the potential to decrease American demand for Canadian goods, due to increased pricing, as the United States is collecting more money from Canadian producers.


In response to increased tariffs, many Canadian producers will likely increase their prices to maintain a beneficial profit margin for themselves. If this were to occur, U.S. consumers would see price increases in Canadian-sourced goods in their everyday grocery stores, vehicle dealerships, and even energy bills. However, this also could increase demand for locally sourced goods as consumers turn to lower-priced products, benefiting American businesses and domestic brands. The United States may not currently have the agricultural or industrial capacity for consumers to fully substitute away from Canadian goods, so it is possible that both of these things may occur at once. 


Whether or not these tariffs will even impact American consumers will depend on the formal announcement that President Trump has yet to make. For now, the full impact will remain unknown until the president decides how–or if–he will make good on his statement. 


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