The Canadian Chamber of Commerce warned before the 2024 U.S. election that a broad new tariff could damage both economies. Its report emphasized that Canada–U.S. trade is not a simple exchange of finished goods: factories, energy systems and services operate through deeply connected supply chains.
The report assessed a campaign proposal
Donald Trump had proposed a 10-per-cent tariff on imports to the United States. Economist Trevor Tombe modelled the proposal for the Chamber’s Business Data Lab, asking what would happen if it became permanent.
The exercise was a scenario, not a forecast. Actual effects would depend on exemptions, exchange rates, retaliation, company decisions and how long a tariff remained in place.
The estimated costs crossed the border
The report estimated that a permanent tariff of that scope could reduce Canada’s economy by roughly 0.9 to one per cent, representing around C$30 billion in annual economic cost. It placed the U.S. cost near US$125 billion a year.
If other countries retaliated, the model estimated deeper Canadian effects, including a 1.5-per-cent reduction in income and a 1.6-per-cent productivity decline. Modelled losses should be reported with their assumptions rather than presented as money already spent.
Supply chains make tariffs circulate
Canadian energy, metals, automotive parts and agricultural products are inputs for U.S. firms. Components may cross the border more than once before a final product reaches a customer.
A tariff collected at import is legally paid by the importer. The economic cost may then be divided among consumers through higher prices, companies through lower margins and suppliers through reduced orders. Saying another country simply “pays” the tariff hides that distribution.
American states also depended on Canada
The Chamber said Canada was the leading export destination for 34 states at the time. It estimated Canadian trade at about 14 per cent of Michigan’s economy, 10.2 per cent of Illinois’s and 6.7 per cent of Wisconsin’s.
Those Midwestern states were politically important and particularly integrated with Canadian manufacturing and commodities. The report used that local exposure to argue that open trade was an American interest as well as a Canadian request.
Protectionism was not confined to one candidate
Trump’s universal-tariff proposal was the clearest quantified risk, but Kamala Harris campaigned within an administration that had used industrial subsidies and domestic-content preferences. Canadian officials prepared to engage either party.
Not every industrial policy is equivalent. A tariff, procurement rule, tax credit and security restriction operate differently, even when each favours domestic production. Precise analysis should identify the instrument and affected sector.
The 2026 CUSMA review added pressure
Whoever won the White House would govern during the first joint review of the Canada–United States–Mexico Agreement. The review mechanism did not automatically terminate the pact in 2026, but unresolved concerns could create years of uncertainty.
Businesses value predictable customs rules because factories and infrastructure require long investments. Canada’s preparation included outreach to governors, legislators, unions and companies whose own employment depended on cross-border commerce.
Diversification and integration were both necessary
Canada could reduce vulnerability by improving ports, internal trade and access to other markets. Diversification, however, could not quickly replace the geography and scale of U.S. demand. In 2024, two-way goods trade with the United States again exceeded C$1 trillion.
The Chamber’s warning was therefore neither a guarantee of catastrophe nor a defence of every existing trade rule. It was an evidence-based reminder that protection can impose domestic costs. Any proposed measure should be tested against price, employment, supply-chain resilience and the likelihood of retaliation on both sides of the border.
