Economic impact of threatened tariffs could be ‘dangerous,’ says prof

Nova Scotia’s economy could take a big hit if U.S. president-elect Donald Trump follows through on threats to impose a 25 per cent tariff on all Canadian goods entering the country.

“Two-thirds of our exports are going to the U.S.,” says Dalhousie economics professor Teresa Cyrus. “So if he raises tariffs by 25 per cent, then that’s huge. That would have a big impact on our industries.”

Trump said in a post on Truth Social Monday he will impose a 25 per cent tariff on all products from Canada and Mexico as soon as he takes office. He said he will keep them in place until both countries crack down on border control.

According to Statistics Canada, Nova Scotia’s total production of goods and services in 2023 was $43.8 billion. Fifteen per cent of that total, $6.6 billion, was exported from the province, and two-thirds of that, or $4.4 billion, was exported to the U.S.

Nova Scotia’s top export to the U.S. is tires, followed closely by fish and crustaceans. A higher U.S. tariff would raise prices for American consumers and likely lower demand for Nova Scotia products.

Cyrus, who is chair of Dalhousie’s economics department, said all Nova Scotians would see repercussions, not just those working in the affected industries.

“The problem is that if we’re selling less, then we are getting less tax revenue going into the government from sales, from HST and so on,” said Cyrus. ”So that means less money for the government.”

“If there’s less money for all the services that the government provides, then that’s pretty dangerous.”

Prime Minister Justin Trudeau met virtually with the country’s premiers on Wednesday after they requested an urgent meeting to discuss strategy in response to Trump’s threat.

Dalhousie economics professor James McNeil said Canada might respond by imposing its own tariffs on U.S. goods, as Mexico has announced it will. But that would have its own repercussions.

“Tariffs tend to be inflationary. The reason we like low tariffs is because it means that we can import goods more cheaply from abroad,” said McNeil. “For consumers, typically that’s a good thing. Competition leads to lower prices.”

Both McNeil and Cyrus said there’s no need for panic in response to Trump’s social media post.

“We get a tweet,” said McNeil, and “it’s a little bit hard to infer how much of this … is going to end up in a policy.”

Cyrus said if the tariffs are implemented, there’s not much Nova Scotians can do to compensate for lower revenue from the U.S.

“We could all go and have lobster for Christmas dinner, I guess,” said Cyrus.