Tariffs can be counterproductive, especially when imposed against long-time allies.
What if President-elect Donald Trump carries out his threat? and impose a 25% tariff on all Canadian exports.it would have a negative impact on the Canadian economy. But it would cause a new surge in inflation, hurting the American economy, many businesses, and especially ordinary Americans.
Like the president-elect, I come from a business background. His desire to create a balance of power and make America richer is understandable. We both share a desire to strengthen border security and control immigration, and Quebec has been asking the Canadian government to do that for several years. united states Ask Canada to share military spending This is also a goal we share, especially since Quebec is an important player in the defense sector.
But President Trump should give Canada time to meet expectations on these two issues before imposing tariffs that would significantly harm both countries. Since the free trade agreement signed by President Ronald Reagan, the economies of Quebec (as far as I know best) and the United States have become so integrated that imposing tariffs on our products would hurt the American economy. This can lead to serious self-harm.
Already, the threat of tariffs is creating a lot of uncertainty and discouraging investment on both sides of the border. Our analysis concludes that a 25 percent tariff on exports from Canada and Mexico would reduce U.S. GDP by at least 1 percent per year, not to mention inflation.
For example, Quebec supplies 64 percent of the aluminum raw materials used by American companies. The United States does not have the capacity to produce aluminum to replace this critical input and will not be able to do so in the medium term. So a 25% tariff would only make beer cans, auto parts, airplane parts, and many other products more expensive for U.S. consumers and businesses.
Quebec is also a major supplier of American military aviation supplies, particularly engines, landing gear, and flight simulators. These products are not substitutable in the short or medium term, and imposing a 25% tariff would amount to a 25% increase in costs for American companies and ultimately for the Department of Defense.
The United States is understandably concerned about national security. China has almost a monopoly on strategically important mineralsnatural graphite, lithium, gallium, and certain rare earth elements. Quebec can supply these strategic materials and help the United States break free from Chinese control. Imposing 25% tariffs on imports of strategically important goods will only undermine America's national security objectives.
The president-elect's concerns about reducing trade balances with other countries are entirely legitimate, but attacking Canada would be picking the wrong target. Canada's trade surplus with the US That's because of reliable and cheap energy imports, which support the American economy. Without these Canadian oil, gas, and electricity imports, the United States would have a $58 billion trade surplus with Canada.
Quebec exports electricity to the United States, including via transmission lines to New York. This clean, reliable, and cheap electricity is a huge benefit to New Yorkers and their businesses. One example: Trump Tower's energy costs will go down.
Although Canada will not become the 51st province to join the union, our economies are very intertwined and we already have a customs union when it comes to trade. The free trade in goods between our countries, established by President Reagan and Prime Minister Brian Mulroney, has greatly enriched our economy and our people. Let's continue to build North America's great economic power instead of turning on each other. That is our common interest.
François Legault is Premier of Quebec.
