If U.S. President-elect Donald Trump follows through on his proposed 25 per cent tariff on Canadian imports, Ontario will bear the brunt of the economic impact, according to Ian Lee, an associate professor at Carleton University’s Sprott School of Business.
“It’s going to have a disproportionate and focused impact on southern Ontario,” Lee told CP24.com, warning that the province could face severe consequences.
Canadian Dollar at Risk of ‘Catastrophic Decline’
The immediate fallout of the tariffs, Lee explained, would likely be a dramatic decline in the Canadian dollar.
“The dollar is going to crash like a stone,” he said. “It will be a catastrophic decline, affecting every Canadian’s purchasing power.”
Given that imports make up a third of Canada’s GDP, the economic strain would ripple through households across the nation.
Ontario’s Auto Sector Under Threat
Ontario’s auto industry is particularly vulnerable. The proposed tariffs would render Canadian auto parts uncompetitive, forcing U.S. companies to look for alternate suppliers, Lee warned.
“Companies will immediately put in emergency plans to lay off people,” he said, predicting widespread job losses in Ontario’s manufacturing sector.
The repercussions of these layoffs, he added, would likely push Canada into a recession.
Business Leaders Sound the Alarm
Catherine Fortin LeFaivre of the Canadian Chamber of Commerce echoed these concerns, emphasizing the gravity of the situation.
“We have to take this threat very seriously,” she said, citing a report that found even a 10 per cent tariff could reduce productivity by one per cent.
“At 25 per cent, we’re looking at a recession,” Fortin LeFaivre added, noting that the impact would extend to consumers and businesses on both sides of the border.
Strategic Negotiations Are Key
Lee stressed the importance of a measured response from Canada’s political leaders.
“Open up dialogues and find out what Trump wants from us,” he advised, pointing to protected industries like dairy and telecom as potential areas for negotiation.
Premier Ford’s Role in Mitigation
Lee highlighted Ontario Premier Doug Ford’s pivotal role in addressing the crisis.
“Premier Ford, as the leader of Canada’s most powerful province, must work side by side with Prime Minister Trudeau,” Lee said, suggesting Ford’s pro-business stance could resonate with Trump’s administration.
Ford, who called the tariffs “the biggest threat we’ve ever received from our closest ally,” has already emphasized the $500 billion in annual trade between Ontario and the U.S.
“Canada’s leadership must set aside differences for the greater good,” Lee urged, underlining the need for unity in the face of this economic challenge.