If Donald Trump applies the 25% customs tax that he is threatening to implement, Canada could quickly find itself in recession.
• Also read: Trump promises a 25% increase in Canadian customs taxes
• Also read: “A huge risk to the Quebec and Canadian economy”: Trump’s customs taxes worry the political scene
This is what market strategist Simon Brière said in an interview on the show “Le Québec matin” on Tuesday morning.
“According to my calculations, if we really have (these 25% tariffs), it is quite reasonable to believe that we could have a GDP drop of 2 to 3%, which means a recession,” he said. -he indicated.
The scale of this tariff increase planned by Donald Trump is much greater than financial analysts believed.
“It would be a disaster 25% on fare charges,” he mentioned. In reality, it wasn’t even on the agenda of most strategists, we used 10 or 15%.”
Even if the increase is not yet in effect, real impacts are already starting to be felt.
The Canadian dollar and the peso also experienced declines overnight, after Donald Trump announced his intentions to implement these tariffs.
“The American dollar is much stronger today,” said Mr. Brière. With tariffs increasing, everything in the United States is worth more. This brings the whole inflationary side of pricing policies to the forefront. The Canadian dollar has followed a bit of the opposite curve.”
“The exchange rate is devalued, so vacations to Florida this year may cost more,” he added. It’s going to take $140 Canadian to get $100 American.”
The Bank of Canada could decide to lower its key rate more quickly in order to stimulate the economy, according to the financial strategist.
“A weaker Canadian dollar could even mean interest rates, if it goes in that direction (…) it would perhaps be downward in Canada,” he estimated.
Donald Trump’s announcement, however, remains at the threat stage, given that he is not yet president.
“Technically, Mr. Trump is not yet president (but) he really put on the agenda, here is what will happen, it is 25%,” argued Mr. Brière. He’s really showing his colors, but for now, he’s still a threat.”
“I think we’ve all been put in the same basket,” he added. This is going to be a pretty delicate political position for the next few weeks. We will prepare for all eventualities.”
During his first term, Mr. Trump also threatened to raise tariffs, but following trade deals, he ultimately did not do so.
Watch the full interview in the video above