A well-known Canadian economist is predicting that the U.S. could be the hardest hit by the tariffs threatened by President Trump, and not Canada.
Conference Board of Canada Chief Economist Pedro Antunes visited Chatham on Thursday and told CK News Today the tariffs would ultimately hurt the American economy more than it would hurt Canada.
"That would hit the U.S. economy in the long run more so than it would hit Canada's economy because most of what we sell to the U.S. are resources and resources are inputs into their production process and inputs that make them competitive," said Antunes.
Antunes calls the 25 per cent tariffs nonsense and a bullying tactic to try and drum up business and investment in the U.S.
"It's a tactic that will lend it to getting at other ends. One of them is to create enough anxiety and uncertainty that businesses don't invest in Canada, that on their own just the threat of this, they will invest in the U.S.," he noted. "The issue for the U.S. now is that they have a big deficit, a six per cent deficit as a share of the GDP this year coming. They're going to need funds and one of the ways they're looking to get more funding to keep the tax cuts is to essentially use tariffs to leverage some revenues."
Antunes hopes tariffs are not imposed on the auto sector because they would "decimate" the sector on both sides of the border.
He said our "saving grace" might be the equity and financial markets because President Trump doesn't like to see them tumble.
"President Trump I think is attuned to what happens with the equity markets and he doesn't like to see them drop and we saw some sense of that. If markets really believed that we were going to have tariffs, we would have a much weaker Canadian currency right now and a lot more concern about Dow and other stock markets," noted Antunes.
Antunes is also critical of the "abrupt" about-face on immigration by Canada, saying the reversal will negatively impact the Canadian labour market with early retirements trending. He said many employers are also panicking because they were encouraged to hire non-resident workers to fill job vacancies in 2023, but now hundreds of thousands of work permits are expiring and immigration is being reduced, leaving a big gap in the workforce along with implications for the economy, economic growth, and job creation.
He also debunked a couple of myths. Antunes said the rise in inflation and housing prices should not be blamed on immigration. Antunes noted higher incomes, a glut of savings, relocating out of urban centres, and more consumer spending pressuring the supply chain -- all due to the pandemic -- is what caused inflation and house prices to climb.
Antunes spoke to a large crowd at the Bradley Centre in Chatham on Thursday about immigration and the economy.
Antunes also warns those who have mortgages up for renewal this year that mortgage and interest rates won't come down much in 2025, adding there may be another small rate cut in March, but not much more after that.