(Bloomberg) -- Canada would emerge from a trade war with much deeper scars than the US should it retaliate against President Donald Trump’s potential tariffs, economist David Rosenberg said.
The founder of Toronto-based Rosenberg Research & Associates Inc. said the Canadian government’s plan for “tit-for-tat” counter-tariffs would backfire. Canada exports more than 20% of its gross domestic product to the US, while the US sends only 1.2% of GDP to its northern neighbor, he said in a Monday morning note to clients.
“There are times when it pays to just take the lumps and move on — I’m not sure getting into a full-blown trade war, no matter who started it, will make Canadians better off in the end,” Rosenberg wrote.
Officials told Bloomberg News last week the Canadian government plans to retaliate with tariffs only if the US administration moves first.
Trump will not unveil tariffs immediately, but will instead call for federal agencies to study tariff policies and the US’s trade relationship with China, Canada and Mexico, officials close to Trump told Bloomberg News, confirming an earlier report in the Wall Street Journal.
The Canadian dollar was up about 1% to C$1.4333 per US dollar as of 12:45 p.m. New York time, on pace for its biggest gain versus the greenback since 2023.
In his inauguration speech, Trump said he plans to levy tariffs against foreign goods but did not go into specifics.
“We are strongest when we work together, and I look forward to working with President Trump, his administration, members of the United States Congress, and officials at the state and local levels to deliver prosperity for our peoples – while protecting and defending the interests of Canadians,” Canadian Prime Minister Justin Trudeau said in a statement congratulating Trump.
--With assistance from Laura Dhillon Kane.
(Updates currency move, details from Trump speech, Trudeau statement, beginning in sixth paragraph.)
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