As a trade war between Canada and the U.S. ignites on the back of new tariffs announced by both sides on Thursday, former Canadian foreign affairs minister Peter MacKay says the “friendly fire” will lead to collateral damage that will ripple across many different sectors.

MacKay, now partner at law firm Baker McKenzie, told BNN Bloomberg Friday that there is no question that U.S. tariffs on steel and aluminum, as well as Canada’s retaliatory measures, are going to impact Canada negatively.

“This is not where anyone wants to be. When you’re in any kind of a war there is collateral damage and to take the analogy further, I think this is a bit like friendly fire or blue on blue as the military sometimes call it,” he said. 

“It’s beyond all understanding really to invoke this 1962 trade expansion act 232, because as the prime minister rightly pointed out, Canada is not a security threat. And in fact, our economies are so integrated at a military level that this is going to impact them [the U.S.] in a much more negative way.”

MacKay added that besides North American Free Trade Agreement talks being “severely imperilled” now, the threat of more tariffs in the auto sector also loom.

“All of this is very foreboding for the Canadian economy. We see a drop in growth, we see GDP numbers,” he said. “It will be interesting to see the Canadian job numbers in the coming days, because this really puts a lot of uncertainty and a lot of ice under the relationship and in terms of the impact on the Canadian economy.”

Statistics Canada reported Thursday the Canadian economy grew at its slowest pace in nearly two years in the first quarter of this year at a seasonally adjusted annualized rate of 1.3 per cent, which was also below forecasts.

MacKay also raised concerns about how the Trump administration is playing “so many different dangerous games with China” and with sanctions against Europe.

“Now we’re into an era where the United States has no friends and enemies, only interests and that creates such uncertainty and volatility across so many markets,” he said. 

“There are trade talks going around the world now to realign some of the trade relationships and the WTO (World Trade Organization) rules to apply are now being questioned.”

‘LOOK FOR ALTERNATIVES’

With a backdrop of “American first, America alone” and protectionism signals coming from the White House, MacKay urged Canada to “look for alternatives” and diversify its trade strategy when the Trudeau government imposes its trade countermeasures. 

“[We have] to look at how we can capitalize on CETA (Canada-European Union Comprehensive Economic and Trade Agreement), to look further into the future on TPP (Trans-Pacific Partnership), potential uptick in trade with the U.K. in the aftermath of Brexit,” he said. 

MacKay also warned of the impact on Canada from the U.S. lowering taxes, easing regulations and becoming more energy independent.

“Canada in North America is increasingly looking to the U.S. as a competitor as opposed to a trade ally,” MacKay said. “This is an entirely different dynamic in the relationship and maybe the new normal. We are seeing things through the looking glass compared to the traditional relationship.”