Responding to Tariff Threats and Mitigating Risks to Canada’s Economy

As the U.S. implements policy shifts in international trade and other areas, Canada faces challenges and opportunities in maintaining a stable economic relationship with its largest trading partner. This webinar is the fourth installment in GRI’s 2025 Macroeconomic Policy Webinar Series, offering insights for financial executives, policymakers, and business leaders on the U.S. policy reset and its impact on the Canadian economy.

Objectives of the U.S. Administration

Christopher Sands, Director of the Canada Institute at the Wilson Centre, joined GRI’s Jason Stewart to offer a U.S. perspective on the challenges the new U.S. administration poses for Canada and the Canadian economy. Sands said that the administration has two main objectives:

• Winning the great power competition with China and Russia by resetting globalization and establishing energy dominance; and
• Establishing an “America First” policy to enhance nationalism and national security, and benefit blue-collar workers that are a key voting block

Reasons for Optimism?

Sands noted that President Trump’s public statements are likely an attempt to shift the range of acceptable ideas at a given time, so that less extreme ideas seem more palatable. His more outlandish rhetoric is mostly a bargaining ploy. Likewise, the administration’s aggressive attitude towards cutting the civil service is meant to keep the opposition off balance, and he pointed out that some of the firings have already been rescinded.

Sands gave participants more reason for optimism, observing that the Republican majority in the House of Representatives is thin, so they might need to work with Democrats or struggle to enact some of their policies. He offered additional context, including that steel and aluminum tariffs apply to all countries, reducing the likelihood of U.S. buyers switching suppliers. He observed that the USMCA is likely to be reviewed early, in 2025, potentially reducing uncertainty for Canada.

More Challenges Ahead

Sands suggested watching for how high U.S. debt and deficits and a stronger U.S. dollar will impact the administration’s agenda. He noted that the “America First” approach has led to increased anti-Americanism, which will be a challenge for the next Canadian government when negotiating future trade agreements.

Additional Content:

Will U.S. Democracy Last as Long as a Head of Lettuce?

Impact 2024: How Donald Trump’s Reelection Could Amplify Global Inter-systemic Risk

The U.S. Election and Economic Policy – Implications for Financial Institutions