Tariff Threats Could Erase Canada's Trade Advantage

Canada's trade advantage over other countries has been dwindling in recent years, but it may take another hit if US President Donald Trump follows through on his threat to impose a 50% tariff on over 500 categories of products.

The tariffs, set to take effect on August 19 under Section 338, would apply to 5% of Canada's shipments to the US, worth around $20.1 billion in goods.

National Bank of Canada economists Taylor Schleich and Ethan Currie note that while this move could narrow Canada's tariff advantage over other countries, it would still remain intact at least for now.

The tariffs are seen by many as a negotiating tactic rather than a genuine threat, but their potential impact is being closely watched. In fact, the global trading order has already shifted significantly, with Vietnam poised to surpass Canada as a source of US imports.