The impact of US trade tariffs on the American economy may hit Canada harder than the tariffs they are levying on us.
That finding is contained in a new analysis issued by the economics team at RBC Royal Bank. While it might seem counter intuitive, the premise the bank is putting forward is that American-imposed tariffs will dampen US economic activity because imports from around the world go up in price for American consumers.
And that slowdown might actually have a bigger spillover effect into Canada – which relies on selling goods and services across the 49th Parallel – than the tariffs themselves. Basically, because our economies are so integrated, if they slow down, we slow down.
And, inflation could resurface in this country even with a slowdown because of the elimination of the carbon tax. The economists say higher-taxed American goods that we import will increase the cost of living in Canada but not having to pay the tax on home heating or gasoline gives Canadians the ability to cover rising costs.
