Navigating tariffs: economist outlines potential impacts
Bonnie James
Local Journalism Initiative
Published in the Pontiac Journal on April 9, 2025.
FORT-COULONGE – Around 30 people gathered at Café Downtown on March 26 to hear Conference Board of Canada Chief Economist Pedro Antunes discuss the implications of U.S. tariffs. The talk was hosted by the Pontiac Chamber of Commerce, SADC, and
the MRC.
Antunes began by outlining the rationale behind U.S. President Donald Trump’s tariff strategy. Since his first presidency in 2016, Trump has targeted the trade deficit with Canada. Essentially, Canada exports more goods to the U.S. than the U.S. exports to Canada, which Trump believes is a losing arrangement for the U.S. Tariffs, he believes, will drive production and investment back to American soil.
While most economists support free trade, Trump’s current chief economic adviser, Stephen Miran, sees it as disadvantageous. Miran argues that tariffs won’t harm the economy because they will cause the U.S. dollar to depreciate, softening the impact and incentivizing domestic investment without triggering a recession.
Antunes suggested that this approach may be more of a strategic bluff than a serious threat. He noted that in 2016, Trump used tariffs to force a
renegotiation of the North American Free Trade Agreement (NAFTA), but the measures were dropped within a year, and trade relations stabilized.
Antunes flagged two major issues the U.S. faces in 2025: a need to re-shore investment and a $2 trillion federal deficit. In that context, tariffs could be used as a tool to raise revenue, especially since reducing government spending alone won’t bridge the gap.
Regarding the impact on Canada, Antunes explained that more than half of Canadian exports to the U.S. are raw materials such as oil, electricity, potash, and metals. Tariffs on these resources are unlikely, as they would increase U.S. production costs and fuel inflation. However, tariffs on aluminum, lumber, and metals would be “very hurtful.”
He warned that a 25% tariff—even temporarily—would shutdown most Canadian manufacturing. If in place for one quarter, it could cost the Canadian economy $35 billion (1.3%) and eliminate 136,000 jobs. If sustained over a year, inflation could rise by 0.7%, and the Canadian dollar could fall to 64 cents U.S.—which, ironically, might soften the blow for exporters.
“The longer we have a tariff, the bigger the hit will be. If it lasts one quarter, it’s a
0.4% impact on the economy. If it lasts four quarters, we’re looking at a recession,”
said Antunes.
Trefor Munn-Venn of Leystone Farms asked how agriculture would be affected. Antunes said it depends on the business model and market. He encouraged farmers to capitalize on the
buy-Canadian trend and push for the removal of interprovincial trade barriers. While U.S. market access may become more difficult, he noted that new opportunities exist.
To respond effectively, Antunes recommended that Canada diversify trade through bilateral agreements, increase defence spending to spur growth through procurement, reform the tax system to attract private investment, eliminate interprovincial trade barriers, and invest in knowledge-based sectors like finance, engineering, and AI.
For small businesses, he advised reviewing supply chains, stocking inventory in advance, and diversifying suppliers. Companies should strengthen domestic networks, collaborate on bulk purchasing, understand who pays tariffs, and be aware of currency risks. He also encouraged businesses to tap into the “buy Canadian” movement, use direct-to-consumer platforms, explore new export markets, and seek government support programs.
The event ended with attendees forming breakout groups to discuss their current strategies and possible future actions in response to tariffs.
