The impact of US tariffs on Canadian economy, regardless of how long the trade war will last and whether it escalates or not, comparisons with past recessions can give ideas about how bad things can be gained for Canadians.
Scotiabank Report With a 25% tariff, Canada’s GDP was also 5.6% lower in the first quarter of 2027, 4.7% lower with half of retaliation and 3.8% lower without retaliation.
For comparison, during the Covid-19 pandemic, Canada’s GDP experienced an annual decline of 5.4% in 2020, and during the 2008-2009 recession, GDP fell 3.3% over three-thirds of quarter, according to Canada Statistics.
“After that, you need to go back from 1930 to 1933. Major Repression saw a decline in actual GDP for the fourth consecutive year. Livio di Matteo, a professor of economics at Lakehead University, said in an interview.
On the same day, the US placed a 10% tariff on Canadian energy and a 25% tariff on all other Canadian products, while Ottawa retaliated with a 25% tariff on US goods worth $2.5 billion, with another $125 billion imports receiving tariffs 21 days later. Ottawa says the proceeds generated through tariffs will be used to support Canadians.
Former Congressional Budget Officer Kevin Page told the Epoch Times that it would be challenging for the government to design and expand support packages for Canadians in similar trade wars during Covid-19 and the 2008 recession. He also said there is one potential “wildcard” of the “wildcard” that could escalate the trade war.
US President Donald Trump said on March 4th If Canada responds with retaliatory tariffs, the US tariffs will be “According to a previously signed executive order, it will soon increase by a similar amount.
In addition to the first round of tariffs Trump imposed on Canada, he has also introduced separate 25% tariffs on aluminum and steel since March 12, ordering authorities to review the existing trade agreements and propose mutual tariffs by April 2.
On March 5, the US announced that three big car manufacturers (Ford, Stellantis and General Motors) will receive a one-month exemption on tariffs for Canadian and Mexican vehicles complying with the USMCA trade agreement, but other exemptions may be introduced, leaving uncertainty about how long it will last.
Covid-19 pandemic, 2008 recession
Canada experienced a major shock to its economy, albeit with a relatively quick recovery when the Covid-19 pandemic first hit in 2020.
The country’s GDP has shrunk 5.4% That year, the sharpest annual decline ever since Statistics Canada first began tracking data in 1961; GDP has recovered It increased by 4.6% in 2021.
Unemployment in the country Rate hit 13.7% in May, comparable data was the highest since it was available in 1976, but by September 2021 there was employment level I’ve recovered to pre-pandemic numbers.
The pandemic has weakened demand across the economy, resulting in an average inflation crater Only 0.7 Percentage for 2020. However, due to resuming demand, disruption in the supply chain and rising energy prices, inflation is likely to occur. It will rise to 8.1% By June 2022, the Bank of Canada responded by dramatically increasing interest rates, and ultimately in August 2024 inflation returned to 2%.
During the Great Recession of 2008, Canada’s GDP fell 3.3% from the third quarter of 2008 to the second quarter of 2009. Recovered 3.3% 2010.
I was able to see that period Canada’s inflation rate It rose to 3.5% in August 2008, then steadily fell to -0.9% in July 2009, and by 2010 it had recovered to the Bank of Canada’s 2% benchmark.
Furthermore, the recession in the early 1980s saw Canada’s GDP. Reduced by 2.9% Unemployment rate rises Up to 11% in 1982. The recession in the 1990s meanwhile saw a decline in GDP. 2.1% Unemployment rate rises 10.3%n 1991.
John Ries, professor at UBC’s Sauder School of Business, said Covid-19 and the 2008 recession were accompanied by a rapid decline in stock markets, and Trump’s tariffs are unlikely to lead to a similar scenario.
“ timing teeth a a bit different. the do not have a crash-the Customs None market He told the Epoch Times.
Lease also said it does not expect major industries, such as the automotive sector, to be in bankruptcy.
Ian Lee, a business professor at Carleton University, said unlike past recessions,–This was driven primarily by a cyclical economic pattern in which demand finally recovered.–The recession caused by Trump’s tariffs can follow a different trajectory.
“As long as tariffs remain, it will be permanent and will involve reductions in our national income until we reach an agreement to withdraw,” he said in an interview.
Great Fear Prepression
While it may be a vigilante to contrast the current economic issues in Canada from 1929 to 1939, the problems of Great Fear pression are largely related to tariffs, there are some similarities in particular.
The Great Repression was caused by a stock market crash in October 1929, but was also caused by a decline in global commodity prices, economic demand and credit. Canada saw GDP I’ll fall By 1933, more than 40% had been achieved, and the unemployment rate had exceeded 12% until the start of World War II in 1939, with one in five Canadians surviving relying on government relief.
However, Great Repression was exacerbated by the US Smoot Holy Customs Act. sThe law, which won the IGN for President Herbert Hoover in 1930, raised tariffs on more than 20,000 imports to an average of 40-60% rates, leading to reduced global trade when other countries responded with retaliatory fees.
Canada responded by blaming its own tariffs on the US and asking for close trade with the UK and other federal countries. Canada signed it Free trade agreements with these countries, which were still harming US tariffs. Then, in 1933, they began trade negotiations with the new US administration.
Growth, inflation, employment
A Scotiabank report issued last November said that the 25% tariff on Canada was a similar amount of anti-rebound, rising 4.1% in the third quarter of 2025 and the unemployment rate would rise by 3% in the fourth quarter of 2025.
a CIBC Report Starting in February, there were similar forecasts for a decline in the economy, saying that US tariffs could cut Canada’s GDP by 5%. However, the report has a substantial outlook for inflation, which could initially rise above the Bank of Canada’s 2% target, but will fade quickly due to lower demand across the economy.
January Monetary Policy Report, Central Bank I’ve released it The unique “empirical tariff scenario” did not reach a much more harmful conclusion. We outline what happens when all other countries respond in physical form, while the US imposes a permanent 25% tariff on all imported goods. Also, the pass-through of tariffs to prices gradually rises over time, businesses absorb some of the increased costs, and half of the tariff revenue received by Ottawa is transferred to Canadian households, while the other half is used to pay off debts.
In this scenario, Canada’s overall trade balance will deteriorate, Canadian dollars will be depreciated, Canadian business investments will be significantly reduced, Canadian exporters will reduce production, fire workers amid declining demand for goods, and other economies will be affected. This results in a permanent reduction in GDP over time. Inflation also generally increases.
Thus, the bank predicted Canada’s Average GDP First year growth would otherwise be nearly 2.5 points lower, 1.5 points lower in the second year and 1.5 points lower by the third year before returning to normal. Canada’s inflation rose 0.1 percentage points in the first year of tariffs, 0.5 percentage points in the second year and 1 percentage point in the third place.
Regarding the number of Canadian jobs that could put tariffs at risk, the Minister of Immigration Mark Miller Ontario Premier says 1 million jobs are “at risk” Doug Ford He says that 500,000 jobs could be lost in his state alone.
Lee believes Canada will see a “worst” economy slump than it did in either 2020 or 2008, but Ottawa said it can avoid that by renegotiating the USMCA trade agreement to open up protected industries centered around banks, telecoms and dairy products.
“The way out isn’t with more and more tariffs, that’s what happened with depression,” Lee said, adding that this led to a trade war and a “downward death spiral.”
“I don’t think that’s going to end up. I think there’s an exit ramp, but that’s on the negotiation table.”
