Canadian Economy Awaits Tariff Impact as Republican Senator Offers Reassurance

As Canada prepares for the potential fallout of sweeping global tariffs proposed by U.S. president-elect Donald Trump, a Republican senator has expressed confidence that the current North American free trade pact will offer Canada some degree of protection.

Speaking to CBC's The House, Senator Jim Risch of Idaho said he believes the Canada-U.S.-Mexico Agreement (CUSMA) should shield Canada from the brunt of Trump's tariff plans.

"Republicans generally are free trade," Risch noted during the interview. "On the other hand, you do sometimes have to level the playing field."

Trump has proposed a minimum 10 per cent tariff on all imports into the United States, a move experts suggest could have far-reaching consequences for the Canadian economy. Estimates vary widely, with potential losses ranging from 0.4 per cent to as much as five per cent of GDP.

Despite these concerns, Risch remains sceptical that such broad tariffs will come to pass. "I really believe that's not going to happen," he said, explaining that tariffs are typically applied selectively to industries or products experiencing trade imbalances.

The senator also emphasised the importance of the trade relationship between Canada and the United States. "All U.S. citizens are familiar with the importance that Canada holds in the flow of trade. And trade is good for everybody," he added.

New Commerce Secretary to Shape Trade Policy

On Tuesday, Trump announced his nomination of Howard Lutnick, CEO of Cantor Fitzgerald, as commerce secretary. Lutnick, a vocal proponent of Trump's proposed tariffs, has called them a strategic tool to force other nations to negotiate and lower their own trade barriers.

During the presidential campaign, Lutnick assured that the United States would not impose tariffs on goods it cannot domestically produce, highlighting a calculated approach to trade policy. As commerce secretary, Lutnick is expected to play a central role in shaping the administration’s "Tariff and Trade agenda," as well as overseeing the Office of the United States Trade Representative.

Uncertain Future

While Risch’s reassurances may ease some concerns, the proposed tariffs continue to cast a shadow of uncertainty over Canada’s economic outlook. Analysts warn that even selective tariffs could disrupt key industries, particularly energy and manufacturing, which rely heavily on cross-border trade.

For now, Canadian officials and businesses must await further clarity on the specifics of Trump’s trade policies, as both nations brace for potential shifts in one of the world's most significant economic partnerships.