Trump’s proposed 10% global tariff threatens to disrupt North American trade; for Canada, where more than 77% of exports flow to the U.S., the stakes are enormous. Economic projections suggest potential GDP losses ranging from 0.5% to 5%, with immediate impacts including a 0.4% contraction and a 0.75% drop in employment. Over three years, losses could total $60 billion.

Manufacturing, auto parts, and dairy—the backbone of Canada’s export-driven economy—face the biggest risks, according to Canadian Manufacturers and Exporters president and CEO Dennis Darby. The Canadian Chamber of Commerce warns that annual economic costs could reach $30 billion. Canada is expected to retaliate with tariffs of comparable scope, though such measures are unlikely to eliminate broader economic damage.

However, some silver linings exist. As U.S. investment falls under tariff pressures, Canada might see a trickle of diverted capital, potentially adding billions annually to its economy.

For Trump, the tariffs appear to be a strategic bargaining tool aimed at gaining leverage in the 2026 renegotiations of the USMCA. By pressuring Canada on issues such as digital taxes, military spending, and its auto-parts and dairy policies, the U.S. seeks concessions. However, analysts suggest the U.S. could suffer greater economic losses in absolute terms, raising questions about the long-term effectiveness of this approach for the country Trump claims to want to “make great again”.

As Canada braces for economic turbulence, the resilience of its industries and policymakers will be critical in navigating these next few years.