The U.S. Tariffs: An Overview
From the moment the U.S. declared its intention to impose tariffs on Canadian goods, many protested the effect it would have on the Canadian economy. While Canada was not the only country subjected to high tariffs, it historically has been the closest ally of the U.S. and may not have expected such treatment. The tariffs introduced a great deal of uncertainty and tension in the relationship between the two countries.
In this article, we’ll explore the effects the U.S. tariffs may have on the Canadian economy, and the implications for everyday Canadians. Tighten your seatbelts – the implications are unlikely to be positive.
The Mechanism of the Tariffs
Tariffs are essentially a tax on imported goods. They increase the cost of goods imported from other countries, in an attempt to boost demand for domestic products. The U.S. imports hundreds of billions of dollars’ worth of products from Canada and China every single year. The importing companies pay tariffs on the imported goods and usually pass on the prices to everyday consumers, thereby increasing the cost of any goods they might purchase from targeted countries.
The net effect is to increase the cost of living for ordinary Americans. Due to retaliatory tariffs, Canadians may also experience a higher cost of living, particularly when it comes to American goods.
The Impact on Jobs and Employment
Trade wars are rarely good for business. For example, the auto industry is highly integrated in the U.S. and Canada. Imposing tariffs on Canadian goods may increase the cost of automobile manufacturing in the U.S. The higher cost of doing business may result in a shrinking bottom line and significant job losses across any industries affected, including the Canadian auto industry. This may result in mass layoffs (source: Oxford Economics). Other industries may follow a similar pattern.
The Impact on the Cost of Living
Almost inevitably, importing companies will pass on the increased costs to everyday consumers, thereby making any products imported from targeted countries more expensive. This will likely result in a significantly higher cost of living and further compromise the affordability challenges faced by consumers in affected countries.
Both Americans and Canadians may end up paying more for the same goods over time (source: Yale and the Bank of Canada).
The Long-Term Outlook
As long as the U.S. tariffs are in effect, they will have a devastating impact on the Canadian economy. The longer the U.S. tariffs are in place, the more they will aggravate the cost-of-living crisis and compromise the job market in Canada. As mentioned above, the consequences will not be positive for everyday Canadian consumers.
The U.S. tariffs may also backfire on everyday Americans and increase the cost of living in the U.S. due to retaliatory measures and the companies passing on increased costs to consumers. At the end of the day, the people paying the increased costs will be average Canadians and Americans, not politicians.
Tips for Dealing with the Economic Consequences of Tariffs
Most experts predict negative effects from tariffs on the Canadian economy, job market, and cost of living, as well as added tensions between the formerly closely allied neighbours.
Let’s look at five tips to deal with the potential effects of the tariffs on the Canadian economy as an average consumer:
- Buy Canadian products. Reciprocal tariffs may increase the cost of U.S. goods, so Canadian goods may be cheaper in comparison.
- Stock up on products before they go up in price. If you know your brands of choice will become more expensive, you may consider bulk-buying them in advance.
- Advocate for an end to the trade war. While politicians talk, everyday people pay the price. Raise your voice to protect consumer rights and end the trade war.
- Review your current brands of choice. You may opt for domestic alternatives or products imported from non-affected countries.
- Lower your variable expenses. Cut down on unnecessary spending to boost savings.
In the next section, we’ll consider how online installment loans may help in this situation.
How Can Installment Loans Help?
In these uncertain times, online installment loans may help cover immediate expenses by providing quick funds. If you need fast funds to cover expenses given the ongoing cost-of-living crisis, further impacted by the trade war, consider taking out an online installment loan, also known as a personal loan.
Final Thoughts
The U.S. tariffs may end up having a strong negative impact on the Canadian economy. They may further complicate the picture of affordability for everyday Canadians. If you need funds quickly, apply for an installment loan via Crediteck. We don’t check credit scores or credit reports during the quick online application process. To monitor your credit health, consider signing up for Credit Verify! You will be able to check your credit score and automatically detect mistakes on your credit report.
