The threat of 25-per-cent tariffs on Canadian goods going into the United States could have devastating impacts on the Canadian economy.
But try not to worry too much about it.
It’s unlikely to happen.
So described Scotiabank senior vice-president and chief economist Jean-François Perrault during a Greater Sudbury Chamber of Commerce luncheon on Wednesday.
“They’re largely overblown,” he said of United States President Donald Trump’s tariff threats.
“It’s such bad economic policy, so irrational to do something like that because it’d hurt the American households so much that it’s probably not going to happen.”
Perrault visited Greater Sudbury on Wednesday as part of a speaking tour, and spoke at Brystons On The Park in Copper Cliff.
Central to his comments on the economic outlook during a question-and-answer session was the same thing making national headlines in recent media coverage: Trump’s return to the White House and its potential impacts on Canadians.
Throughout his speech, Perrault clarified that although things might look bad, they’re not as bad as some people are saying, depending on the data you’re looking at.
Trump’s “disruptive force” has created uncertainty, which can be costly in itself.
“When things are more uncertain, people are more cautious,” he said, urging people to forge ahead and capitalize within an economic system where spaces are being freed up by people unwilling to take chances.
“Firms that are really aggressive in trying to capitalize on opportunities are going to do much better than those who are complacent,” he said.
United States impacts aside, he pointed to the “almost certainty” that Canadians will elect the Conservative Party of Canada to power sometime later this year, “which we know is going to be focused, at least we can heavily expect, is going to focus on making it easier for the extractive sector … and that can only be positive for this part of the country.”
On a similar note, he said that Trump’s shift away from environmental sustainability and ESG investing (environmental, social, and governance) “is another reason to be a little more optimistic about the mineral space.”
“You can argue whether that’s good or not for society,” he later added.
Following his public speaking engagement, Sudbury.com asked Perrault about nickel in specific, since the battery-electric vehicles Trump has signalled a shift away from, which rely heavily on Northern Ontario’s nickel producers for raw materials used in battery manufacturing.
Regardless of what happens with electric vehicles, he said, “foundational demand for nickel is pretty strong,” with energy needs so great that demand for local nickel will remain in place.
As for the tariffs threat, he reiterated that they’ve likely been overblown.
“Rationale dictates that you would expect there to be reasonably low tariffs, if at all, and not these 25-per-cent numbers,” he said. “Do they want to pay 25-per-cent more for electricity or oil? Of course they don’t.”
That said, Perrault also said during his presentation that Trump has reiterated his pledge to tariff Canada enough times that it’s possible he follows through.
“It’s really hurtful to consumers and businesses in the U.S., or any country that puts tariffs on,” he said. “That’s why we hope these are threats, but at the end of the day, there’s no way the U.S. business community wants these to occur.”
Following Wednesday’s event, Greater Sudbury Chamber of Commerce president and CEO Marie Litalien told Sudbury.com that members have expressed concerns regarding the tarrifs threat.
“There are concerns about supply changes, not only in this community with critical minerals and how that’s going to affect our economy, but also the entire supply chain,” she said.
“I think the optimistic message is important. There are things you can control and things you can’t, and staying positive and looking on the positive side of things is really important."
This, she said, is why hearing from experts like Perrault can help.
Late last year, the Canadian Chamber of Commerce issued a report which laid out the potential impacts of a 25-per-cent tariff on U.S. imports proposed by Trump.
With Canadian economic retaliation, they estimated that Canada’s GDP would shrink by 2.6 per cent (CAD$78 billion), and that the United States GDP would shrink by 1.6 per cent (USD $467 billion). Canada’s economy would be pushed into a recession by the middle of 2025, and some estimates put Canadian job losses at as great as 1.5 million.
Tyler Clarke covers city hall and political affairs for Sudbury.com.