The implications for Canada if Trump goes through with his punishing tariffs

A trillion dollars worth of Canadian goods and services are exported out of the country annually with a third of it going to the United States. One economist says if Trump imposes a 25 per cent tariff on those goods, it will be detrimental to the Canadian economy.

"The reality is that Canada is probably already in a recession, even though we don't have data to back it up," said Moshe Lander, an economics professor at Concordia University.

"But for sure, when these tariffs come, we're going to see that Canada will tip into a recession."

Sectors such as auto, energy and agriculture will be severely impacted. For the oil and gas industry alone, more than 80 per cent is exported to the United States.

"The cost, of course, will be on the Canadian side of things where producers would now find that there's not as much demand for their products coming from the U.S. So they would either have to scale back production, which could mean layoffs, or it could mean that they have to reduce their price to remain competitive in the face of these tariffs," said Lander.

Scott Crockatt, vice president of the Business Council of Alberta, says thousands of jobs will be in jeopardy.

"Up to 25 per cent tariffs would be economically devastating for Canada," said Crockatt.

"Up to 150,000 Canadian families could be out of work from that one policy move alone."

Lander says the negative effects wouldn't be exclusive to Canada as Americans will see the cost of living rise.

"In theory what should happen is that we would see American prices go up by the amount of the tariff. And so that would be bad news for American consumers."

Despite this, U.S. president-elect Donald Trump doubled down on his tariff threat, saying America doesn't need Canada's goods, specifically listing off dairy, lumber and vehicles.

"They make 20 percent of our cars. We don't need that. I'd rather make them in Detroit," said Trump.

Flavio Volpe, president of the Automotive Part Manufacturers Association, says the Canadian and American auto industries are deeply intertwined.

"If you were to shut the path for Canadian cars into the U.S., the first companies he would hurt would be General Motors and Ford, which are the last time I checked American," said Volpe.

"You cannot have a disruption in Canada without an immediate disruption in the U.S."

In response to the tariffs, CTV News has confirmed Canada is preparing retaliatory tariffs in several key U.S. states, targeting goods such as steel and orange juice.

Crockatt says when one country heavily relies on another for exports, just like Canada does with the United States, it leaves it exposed.

"One of the strategies that Canada should think really seriously about is diversifying our customer base and that means opening up more new markets for our products."