Canada's Tariff Trilemma in the Trade War with the US

A trade war between Canada and the US is underway after the US imposed 50% tariffs on $28 billion of Canadian imports. Prime Minister Mark Carney has committed to retaliating in kind, dollar for dollar.

The question is which American goods should be targeted by Canadian tariffs. While many think retaliation may not change US behavior and could harm Canada's economy, the government has chosen to respond.

Trevor Tombe, a professor of economics at the University of Calgary, estimates that matching US tariffs would push Canada's effective tariff rate to levels last seen in the late 1970s. This would be one of the largest single tariff increases in Canadian history.