Canada vs. Goliath: Trade War Escalation Sparks Concerns
The US-Canada trade war has escalated rapidly, putting a strain on one of the world's closest economic partnerships. The $31 trillion US economy is roughly 13 times larger than Canada's, raising questions about Prime Minister Mark Carney's ability to withstand the pressure.
According to Drew Fagan, an expert on Canada-US economic relations at the University of Toronto, 'It was a terrible offer' for Canada to accept President Donald Trump's trade deal last month. Fagan said that if you don't have a deal that's possible, you have to walk away.
Cameron has suspended talks with the US and matched new levies this week, prompting Trump to announce more penalties on Canadian products, including alcohol and dairy. The question now is what Canada will do when the big guy ups the ante.
Wendong Zhang, professor of applied economics and policy at Cornell University, notes that 'Canada is the economy with the most to lose in every scenario.' He emphasizes the importance of targeted retaliation, which can deliver a marginal blow to the US without impacting Canadians.
Senior TD economist Andrew Hencic believes 'the likelihood of further Canadian escalation is low.'