Key questions as tariff threat looms

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Toronto – US President Donald Trump said he would impose a 25 percent tariff on Canadian goods early on Saturday. Below is a look at some of the main questions where the watch decreases.

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What is a tariff?

Definitions are a tax on imported goods. Like other taxes, it is generally used by the government to help achieve policy goals and increase revenues.

The main goal of definitions is to help enhance and protect local producers by raising the costs of importers. The comparison is that these costs are often transferred to consumers.

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Free trade agreements in general are either a decrease or removal of definitions between member countries. But sometimes it does not succeed in this way.

What are the instant and long -term effects of definitions?

The effect of definitions can vary widely depending on the extent of their height, extent to which they are applied widely, and the duration of length.

If the tariff is high enough, it can quickly deter import imports for products in the category. For example, the customs tariff appears to be 100 percent placed on electric cars from China has stopped Tesla’s sale of vehicles from the country in Canada.

Meanwhile, the 25 percent customs tariff imposed on Chinese and aluminum steel is shown by the Parliamentary Budget Officer to reduce the imports of these products from China by nearly half. Mineral tariffs are expected to lead to about one billion dollars in Canada’s revenue over five years.

If the United States imposes definitions, it is likely to lead to a decrease in Canadian goods that are heading there because it will be less competitive. In the long run, Canadian exporters can find other markets, but the huge size of the American economy means that it will be a difficult task to completely replace it.

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How quickly is the price seen on the affected store shelves?

The impact on prices also depends on the nature of the definitions imposed, decisively, the amount of companies that are transferred to consumers. There is likely to be a delay in increasing prices, although companies may initially accommodate some additional cost.

Canada Bank has released some potential predictions of prices, including a somewhat severe scenario for the United States, imposing a 25 percent tariff on all imported goods and commercial partners who respond somewhat on American products.

Under these circumstances, definitions on bank numbers will have little impact on prices in the first year. In the second year, inflation rises by an additional point by 0.5 percent, while the third year sees an increase in one point in the added center of the definitions.

In an illustration, a faster pass from prices for consumers can be witnessed 0.8 points in the first year, while the slow success of costs may actually lead to a slight decrease in prices.

What do definitions mean for the economy?

The United States, which imposes definitions in a harmful cycle of higher costs, can begin to decrease demand, which in turn will slow the economy and create a higher number of unemployment, which leads to erosion of demand and economic health.

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Snow ball factors will pressure the Canadian dollar and cause a decrease in commercial investment, which in turn leads to more job losses and clouds on a broader scale on the economy.

Under 25 percent mutual tariffs scenario in Canada Bank, he believes that export volumes in Canada are severely decreasing due to a lower demand from the United States, while the slowdown in Global GDP also means low commodity prices to reduce the demand for Canadian exports.

GDP will be achieved by 2.4 percent in the first year of the customs tariff under the main scenario of the Central Bank, followed by a 1.5 percent impact in the second year, then there is no effect in the third year.

What are some sectors that can be the most difficult tariffs?

The companies towards export will be more affected, of course, but the outcome depends on how difficult it is to find buyers in order to find alternatives, and the amount of buffer that these buyers must have added costs.

S& P Global said that sectors that address their resources are likely to be more affected, so industries such as paper production and plastic as well as automated and chemical manufacturing.

Industries that often export raw commodities, such as oil, gas and mining, will be less affected because American producers add value to these resources through their processing, so there is a wider margin to accommodate the cost of definitions.

S& P Global said that paper products and printing can see between nine and 15 percent of the decline in production, while minerals will see something between three to six percent.

Integrated industries will also be significantly disabled, such as the auto sector, because the parts often cross the border several times before the car is completed.

This report was published from the Canadian press for the first time on January 31, 2025.

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