Canada Advised Against Retaliating Against US Tariffs

A free-market think tank is advising Canadian policymakers to refrain from retaliating against US tariffs. According to Vincent Geloso, a senior economist at the Montreal Economic Institute, Canada should 'outlast' the US in the current trade impasse.

Geloso points out that during the Great Depression, Canada's initial counter-tariffs did not have a perceptible effect on American trade policy but caused significant harm to the Canadian economy. The economist estimates that falling prices for goods sold to other countries were responsible for about half of Canada's losses during this period.

Geloso suggests that what ultimately resolved the impasse was a change in government, with Democrat Franklin Delano Roosevelt winning a massive mandate in the 1932 presidential election and appointing free-trade evangelist Cordell Hull as his first secretary of state. This move sent a strong signal in favor of open markets.

The current situation is different from that during the Great Depression, but Geloso argues that Canada should still consider the lessons learned from history. He advises Prime Minister Mark Carney to learn from Canada's past response and refrain from counter-tariffs, as they did not achieve their intended goal.