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Canada should respond to the latest American tariffs without disrupting parts of the trading relationship that continue to benefit both countries, according to CJME and CKOM business analyst Paul Martin.
The United States imposed 50 per cent tariffs on targeted Canadian products Saturday after trade negotiations between the two countries collapsed.
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- Here is a list of the Canadian products hit by Trump’s 50% tariffs
- What people are saying about the failed Canada-U.S. trade deal
Martin said he had expected an agreement to come together, but the breakdown was consistent with the negotiating style of U.S. President Donald Trump.
“As you get close to what looks like a deal with the good cop, you send in the bad cop, and that was (U.S Secretary of Commerce) Howard Lutnick,” Martin said. “He arrives, and all of a sudden everything goes sideways.”
Martin said the language used by Prime Minister Mark Carney following the collapse suggests the two countries have become entrenched in their positions.
“This has become almost like who blinks first and who’s calling whose bluff,” he said.
Martin said the federal government’s proposed response appears measured. Ottawa plans to impose dollar-for-dollar retaliatory tariffs rather than immediately restricting Canadian exports to the United States.
“One is there’s a lot of gravity but our response is going to be measured, and it will be comparable as opposed to escalating,” Martin said.
He said Canada should avoid disrupting the sale of products such as oil, natural gas and potash while those trading relationships continue to work.
“He said, ‘I’m not interested in disrupting those flows. It’s only where it’s targeted,’” Martin said of Carney’s remarks.
Restricting those exports could hurt American buyers, but Martin said it would also cost Canadian companies an important customer.
“If you’ve got a relationship or a segment of the economy that’s still functioning, just don’t disrupt that,” he said. “Go where the disruption is being targeted by the Americans.”
Martin warned that Canadian counter-tariffs will make affected American products more expensive for Canadian consumers.
“When you say we’re going to put a tariff on them, it feels like we’re taxing them,” he said.
“In fact, it’s the other way around. We’re taxing ourselves because we’re making the goods that come into Canada from the U.S. more expensive.”
Businesses can sometimes absorb part of a tariff instead of passing the full cost to customers, Martin said, but a 50-per-cent charge is too large for most companies to manage.
“No business can absorb that much,” he said. “This is inflationary on the U.S. side, and they’re feeling it down there.”
Martin said Saskatchewan is unlikely to remove American alcohol from store shelves in response to the failed negotiations. Saskatchewan and Alberta had continued selling American products while other provinces pulled them.
Martin said maintaining trade in areas that still benefit Saskatchewan is important, particularly when the province exports significant amounts of oil and potash to the United States.
“Why do we want to interfere with that?” he said. “If you’ve got a relationship or a segment of the economy that’s still functioning, just don’t disrupt that.”
He said Ottawa should begin with proportionate retaliation while keeping stronger measures available if the dispute intensifies.
“We can keep all of those other things in our arsenal,” Martin said. “Keep the powder dry, and if this thing escalates further, you can hit them on specific areas where it hurts. But remember, it hurts us too.”
The dispute also highlights the risks Saskatchewan businesses face by relying heavily on one market, he said.
Martin said companies need to make a greater effort to develop customers outside the United States, even if expanding into new markets requires travel and government support.
“I think the imperative here for the story for business around this part of the world is get diversified in your customer base,” he said. “I don’t see much urgency in Saskatchewan around that.”
Reducing Saskatchewan’s dependence on a single customer must become a priority as uncertainty surrounding the Canada-U.S. trading relationship continues, Martin said.
“There’s an imperative here that we need to figure out how to reduce our reliance on a single customer.”
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